Credit cards for ATO payments

Want to earn rewards points when paying the Australian Tax Office? Compare credit cards for ATO payments here.

By   |   Verified by David Boyd   |   Updated 29th August 2020

Comparing credit cards for ATO payments

American Express Business Explorer Credit Card

On American Express' website

Apply by 07 October 2020

American Express Business Explorer Credit Card

Balance transfer

N/A

Purchase rate

16.99% p.a. ongoing

Annual fee

$395.00 p.a. ongoing

Highlights

  • Receive 100,000 bonus Membership Rewards points when you apply by 7 October 2020, are approved and spend $3,000 on your card within the first 3 months. New Card Members only.
  • Earn 50,000 business loyalty bonus points when you spend $100,000 every 12 months from the card approval date.
  • Enjoy up to two entries per year to the American Express Lounge.
American Express David Jones Credit Card

On American Express' website

American Express David Jones Credit Card

Balance transfer

N/A

Purchase rate

20.74% p.a. ongoing

Annual fee

$99.00 p.a. ongoing

Highlights

  • Receive 15,000 Membership Rewards Points or 7,500 Qantas Points when you are approved and spend $750 at locations excluding David Jones on your new card within the first three months. Available to new David Jones American Express Card Members only.
  • Earn up to 3 Reward Points per $1 spent at major supermarkets and petrol stations, 2 Reward Points per $1 spent at David Jones, and 1 Reward Point per $1 spent elsewhere.
  • Flexibility to choose Qantas Frequent Flyer or Membership Rewards as your rewards program.
American Express David Jones Platinum Credit Card

On American Express' website

American Express David Jones Platinum Credit Card

Balance transfer

N/A

Purchase rate

20.74% p.a. ongoing

Annual fee

$295.00 p.a. ongoing

Highlights

  • Receive 30,000 Membership Rewards Points or 15,000 Qantas Points when you are approved and spend $750 at locations excluding David Jones on your new card within the first three months. Available to new American Express David Jones Platinum Credit Card Members only.
  • Earn 4 Reward Points per $1 spent at David Jones, 3 Reward Points per $1 spent at major supermarkets and petrol stations and 1 Reward Point per $1 spent elsewhere.
  • Flexibility to choose Qantas Frequent Flyer or Membership Rewards as your rewards program.
American Express Qantas Ultimate Credit Card

On American Express' website

American Express Qantas Ultimate Credit Card

Balance transfer

N/A

Purchase rate

20.74% p.a. ongoing

Annual fee

$450.00 p.a. ongoing

Highlights

  • Receive 55,000 bonus Qantas Points when you apply online, get approved and spend $3,000 on your new card within the first 3 months. New Card Members only.
  • Earn 1.25 Qantas Points for every $1 spent on card purchases, except spend at government bodies in Australia where you will earn 0.5 Qantas Points per $1 spent.
  • $450 Qantas Travel Credit each year (conditions apply).
American Express Explorer Credit Card

On American Express' website

American Express Explorer Credit Card

Balance transfer

N/A

Purchase rate

20.74% p.a. ongoing

Annual fee

$395.00 p.a. ongoing

Highlights

  • Get 50,000 Membership Rewards points when you apply online, are approved and spend $3,000 in the first 3 months. New Card Members only.
  • Receive a $400 Travel Credit each year towards any flights, hotels and car hire when you book online with this card.
  • T&Cs and eligibility criteria apply. Available to new card members only.
American Express Platinum Edge Credit Card

On American Express' website

American Express Platinum Edge Credit Card

Balance transfer

N/A

Purchase rate

20.74% p.a. ongoing

Annual fee

$195.00 p.a. ongoing

Highlights

  • Start your holiday with a $200 Travel Credit every year.
  • Range of travel insurances including overseas medical emergency expenses, travel cancellation cover and more.
  • Earn 3 Membership Rewards points per dollar spent at major supermarkets and petrol stations.
American Express Gold Business Card

On American Express' website

Apply by 07 October 2020

American Express Gold Business Card

Balance transfer

N/A

Purchase rate

N/A

Annual fee

$169.00 p.a. ongoing

Highlights

  • Receive 100,000 bonus Membership Rewards points when you apply by 7 October 2020, are approved and spend $1,000 on your card within the first 2 months. New Card Members only.
  • Earn up to 1.5 Membership Rewards point for every $1 spent.
  • No pre-set spending limit means more flexibility.
American Express Platinum Business Card

On American Express' website

Apply by 07 October 2020

American Express Platinum Business Card

Balance transfer

N/A

Purchase rate

N/A

Annual fee

$1,750.00 p.a. ongoing

Highlights

  • Receive 150,000 bonus Membership Rewards points when you apply by 7 October 2020, are approved and spend $5,000 on your card within the first 3 months. New Card Members only.
  • Earn up to 2.25 pts per $1 spent.
  • Higher earn rate of 1 pt per $1 spent on ATO payments.
American Express Qantas Business Rewards Card

On American Express' website

Apply by 07 October 2020

American Express Qantas Business Rewards Card

Balance transfer

N/A

Purchase rate

N/A

Annual fee

$450.00 p.a. ongoing

Highlights

  • Get 150,000 bonus Qantas Points when you apply by 7 October 2020, are approved and spend $3,000 within 2 months from account approval date. New Card Members only.
  • Earn triple Qantas Points for your business when employees fly on eligible Qantas flights and pay using their American Express Qantas Business Rewards Card.
  • Earn 2 Qantas Points per $1 spent on Qantas products and services.
American Express Qantas Premium Credit Card

On American Express' website

American Express Qantas Premium Credit Card

Balance transfer

N/A

Purchase rate

20.74% p.a. ongoing

Annual fee

$249.00 p.a. ongoing

Highlights

  • Earn 30,000 points when you apply online as a new Card Member, are approved and spend $3,000 in 3 months. New Card Members only.
  • Relax with 2 complimentary Qantas Club invitations every year (conditions apply).
  • Complimentary domestic and international travel insurance.
Qantas American Express Discovery Credit Card

On American Express' website

Qantas American Express Discovery Credit Card

Balance transfer

N/A

Purchase rate

20.74% p.a. ongoing

Annual fee

$0.00 p.a. ongoing

Highlights

  • Earn 0.75 Qantas Point for every $1 spent on Card purchases, except spend at government bodies in Australia where you will earn 0.5 Qantas Points per $1 spent.
  • Earn 1 additional Qantas Point per $1 spent on eligible Qantas products and services.
  • Pay no annual card fee.

Overview

It might seem like an odd distinction to have a category of suitable credit cards for tax payments. But many individuals and almost all businesses need to make payments to the ATO, which, like all government bodies, charges a fee for the privilege of using credit cards for paying tax. So you need to know how to minimise that fee.

And many rewards points and frequent flyer credit cards exclude ATO payments from points earning, or only allow points to be earned at a very low rate (usually at half the rate for standard purchases, sometimes less). So what will also be discussed here is how to earn points on tax payments for minimum cost when using a credit card.

The surcharge percentages quoted in the following discussion were correct at the time of writing, but are subject to change. Please consult your accountant if you need confirmation that surcharges will be tax-deductible for your business.

Ways to pay the ATO and earn points

If you have a credit card that allows points to be earned on ATO payments, it is possible to earn rewards and frequent flyer points when you pay your ATO bill, whether it’s for personal or business income tax, PAYG, BAS payments or a HECS debt. There are several ways to make the credit card payment online, including:

  • ATO EasyPay Service
  • Through your MyGov account
  • Via RewardPay
  • Via B2Bpay

EasyPay

The ATO website offers a service known as EasyPay, which allows you to pay your tax bill using a credit card. This option is available to every kind of taxpayer, including incorporated businesses.

To pay your tax bill with EasyPay, you need to provide either your EFT (electronic funds transfer) code or your PRN (payment reference number) and your credit card details. The minimum payment amount is $10 and the maximum $20 million. (Congratulations are in order if you have a credit card with a limit which will accommodate the maximum amount.)

Depending on whether your credit card allows points earning on government payments, you'll earn either no points by paying the ATO this way, or earn points at half the rate applicable to normal purchases (sometimes less). And you'll pay a transaction surcharge of 0.73% for using a Mastercard credit card, 0.78% for using a Visa credit card, and 1.45% for using American Express.

MyGov

Individuals and sole traders can also access the ATO’s payment options (including credit card payments) by logging in to their MyGov account and clicking on the ATO option in the ‘Your services’ section.

To pay through the MyGov/ATO portal you will need to select the tax account to which the payment is to be directed (e.g. Income Tax, or Activity Statement) and then enter the credit card details and payment amount.

The same disadvantages apply here as with EasyPay – zero points or points earned at half the normal rate or less, plus the credit card surcharges already mentioned.

RewardPay

RewardPay is a business-to-business payment service which facilitates the earning of credit card points when paying business expenses — including rent — with an American Express card. Both the payer and the payee need to have an ABN, so it can be used by sole traders and small businesses when paying the ATO, as well as by larger companies. RewardPay’s revenue source is the 2.15% (including GST) surcharge it makes on transactions up to $20,000. The percentage charged declines on a sliding scale, down to 1.65% for payments over $2M, and the fees should be tax-deductible for businesses in most cases.

Because the credit card payment is made to RewardPay (who then pay the ATO by bank transfer), there are two significant benefits. The first is that, since you are not paying the ATO directly with your American Express card, you will not need to pay the government's surcharge for credit card payments (although you will, of course, need to pay RewardPay's surcharge).

But the second and most important benefit is that you will earn points at your card's rate for normal transactions, because it doesn't count as a payment to the government but as a payment to RewardPay. So the card's points earning rate for government payments is effectively at least doubled – sometimes more – depending on the card. For example, a card which earns 2.0 Membership Rewards points/1.0 frequent flyer points for non-government spending and 1.0 Membership Rewards points/0.5 frequent flyer points for government spending, would still earn 2.0 Membership Rewards points/1.0 frequent flyer points for a payment ultimately going to the ATO.

B2Bpay

B2Bpay works in a similar way to RewardPay, in that it makes payments to the ATO on behalf of businesses, using EFT or BPAY. Fees are charged based on the type of card used to send the payment to B2Bpay, starting at a 1.2% surcharge for using a standard Visa or Mastercard (1.55% for premium and corporate cards), and rising to 2.2% for Amex cards and 2.4% for Diners Club. As with RewardPay, points are earned at the normal rate, not the government rate, for credit card payments, the government's surcharge is avoided, and the B2B surcharge is usually tax-deductible for businesses.

But B2Bpay has two additional advantages. The first major advantage is has over RewardPay is that it accepts all major credit cards, not just American Express. And the second benefit is that, in addition to the points earned from your credit card provider, B2Bpay will also itself reward you with 1.0 Qantas Points for every $100 paid and up to 3.0 Qantas Points per $1.50 paid to B2Bpay bonus billers (e.g. Dell, Hewlett Packard, Lexmark, Endeavour Energy, Betta Electrical, Toll IPEC, Tasmanian Revenue Office, CSIRO, and hundreds of SMEs, but not theATO, sadly). So, you'll earn 1.0 Qantas Points per $100 paid to the ATO – not much, but better than nothing.

Working out if it's worth using credit cards to earn rewards on tax payments

Work out how much a rewards point or frequent flyer point is worth to you. This will largely depend on how you plan to redeem them, but as a rule of thumb, most reward points are worth 0.5 cents each if exchanged for retail gift vouchers and most frequent flyer points should be worth at least 1.3 points each if exchanged for long-haul flights, much more for business class seats.

If the cost of the ATO or RewardPay surcharge exceeds the value of the points earned, it would make more sense to pay by BPAY, or bank transfer, or using a debit card (although there is a small ATO surcharge, and definitely no points, for using a debit card). In the case of B2Bpay there are additional Qantas points to offset the cost of the surcharge – not too many admittedly, at the standard rate of 1.0 points per $100 (unless you have a huge tax bill).

Also, if your card has a monthly or annual points cap, make sure that the payment you're making will not see you exceeding the cap, otherwise you may receive significantly fewer points than you expected.

ATO payments tend to have a specific due date, but if there is any flexibility, leverage the benefit by timing the payment to occur at the beginning of your billing cycle, thus maximising the interest-free days.

For a more detailed explanation of points value vs surcharge cost, see the question 'When does it not make sense to use a rewards card for ATO payments?' in our FAQs section on this page.

Ways to pay the ATO and avoid a surcharge

It is not, of course, compulsory to use a credit card to pay the ATO, although it may be one of the most convenient, and and also a good way to delay payment of your tax bill without paying interest (provided you can afford to repay your card balance in full on or before the payment due date).

Other, cheaper ways to pay include an online bank transfer (no fee for most bank accounts, no ATO surcharge), BPAY (no fee for most bank accounts, no ATO surcharge) and debit card (ATO surcharge of 0.18% for Mastercard, 0.38% for Visa), over the counter at Australia Post or with a cheque in the mail. But none of these methods earns rewards or frequent flyer points.

More about earning rewards on ATO payments

Find out how you can get rewards points for paying your taxes.

  • Pros & cons

  • Tips

  • FAQs

A credit card could give you extra time to pay your tax bill

Using your credit card to pay a tax bill could give you up to 44 or 55 interest-free days to pay, if you can afford to clear your now large credit card balance by the payment due date. Or you could extend the interest-free period by using an introductory 0% purchase offer on a new rewards credit card, or by transferring a credit card tax bill to a new 0% balance transfer credit card.

It takes time to make sure that paying the ATO by credit card is worth it

There's no doubt that working out whether it's worthwhile paying the ATO with a rewards or frequent flyer points credit card is hard work. You'll need to go through your card's terms and conditions with a fine tooth comb, and then do quite a lot of arithmetic to work out your points value, the surcharge cost, and the net result. But hey, if your tax bill is in the thousands, it could be well worth the effort.

Many credit cards exclude government payments from points earning

Unfortunately, many credit cards, especially Visa and Mastercard rewards cards (with a few exceptions), exclude government payments from earning rewards or frequent flyer points. You'll have more luck with American Express cards. But even those cards that do allow ATO payments to earn points, only award those points at a significantly lower rate. However, you can get around this by making ATO payments via RewardPay or B2Bpay, earning points at the rate for normal purchases.

Paying a large tax bill with a credit card could earn you lots of points

If you do your homework on points value and payment surcharges, you could potentially earn a lot of points to cushion the blow of a large tax bill. And if you're in the situation where you need a big points boost to meet an urgent target (such as booking long-haul flights for an overseas holiday) it could be worthwhile using your card to pay the ATO even if the cost will exceed the points value. That's because the net cost (surcharge cost minus points value) is likely to be less than the cost of having to purchase extra points from Qantas or Virgin Australia.

An introductory interest rate on purchases or balance transfers could give you time to pay your tax bill

There are two situations where it could be really worthwhile paying a large tax bill with a credit card.

The first is where you have a new rewards credit card with an introductory 0% interest rate on purchases, which may last for between six and 18 months. You could pay your tax bill with your card, earn rewards points (you'll need to use RewardPay or B2Bpay if government purchases are excluded from points earning) and give yourself plenty of time to clear your debt before it starts incurring interest charges.

The second option is a new balance transfer credit card. Pay your tax bill using your old rewards credit card, earning points (by using RewardPay or B2Bpay if necessary), then transfer your balance to a new credit card with a long zero interest offer on balance transfers.

Avoid using a personal rewards card to pay business tax

It's best to use a business credit card if you expect to make large credit card payments to the ATO for business tax. Some banks place a limit on business transactions channelled through a personal rewards points or frequent flyer credit card, viewing it as an unreasonable use of the personal rewards points program.

Check that you won't run into a points cap

Before deciding to pay a large tax bill with a rewards points credit card, make sure that your points earning rate won't drop because you've exceeded a points threshold, or fall to zero because you've run into a cap.

Don't pay tax with a rewards card if you'll end up paying interest

Paying interest charges on a rewards credit card simply isn't worth it. Rewards and frequent flyer points credit cards almost always have the highest interest rates, and the interest you'll pay for carrying a balance beyond the interest-free period far exceeds the value of the points you'll earn. So don't put your tax bill on a credit card unless you can either pay it off at the end of the month, or there's an introductory interest rate on purchases.

Work out your value per point and surcharge cost per point

Before deciding to pay your tax bill with a rewards credit card, you need to work out whether the surcharge for the payment method you choose exceeds the anticipated value of the points you'll earn. This depends on:

  • Your card's points earning rate
  • How you redeem your points (e.g. for flights, gift cards or merchandise)
  • The payment method you choose (e.g. ATO EasyPay, MyGov, RewardPay, B2Bpay)
  • The surcharge you'll incur for the type of card you use (Visa, or Mastercard or Amex)
  • Whether you're using a personal card or a business card (assuming the surcharge is tax-deductible for your business)

For a detailed explanation of the above factors, and a guide to the points earning rate your card will need, see the question 'When does it not make sense to use a rewards card for ATO payments?' in our FAQs section on this page.

Are there surcharges on ATO credit card payments?

The ATO levies a surcharge for making payments through EasyPay or MyGov using a credit card. Currently these charges are 0.73% for using a Mastercard credit card, 0.78% for using a Visa credit card, and 1.45% for using American Express. The ATO says that these charges are identical to the charges made by its own bank for processing the transactions, so the ATO is not making a profit on transactions.

The ATO credit card surcharge is not subject to GST and is likely to be tax deductible for businesses (so this should include Activity Statement payments for anyone with an ABN) but not for an individual’s income tax payments.

Can I earn points by using my credit card to pay the ATO via BPAY?

It's very unlikely, because even if your credit card allows points to be earned on government payments, many cards exclude BPAY payments from points earning.

Do all rewards credit cards allow points to be earned on ATO payments?

No. Many rewards cards specifically exclude government payments from points earning, so the points earned on ATO payments will be zero. Most American Express cards, however, state that they do earn points on government payments, even though at a much lower rate, typically about 50% of the rate for standard purchases. Read your card's terms and conditions to find out if points can be earned on government payments.

If my card does allow points to be earned on payments to the ATO, will it be at the same rate as other transactions?

Most unlikely. The cards that permit points to be earned on ATO payments usually allocate a much lower earning rate to any transactions with government bodies – usually about half the earning rate for normal purchases.

What credit card payment methods are available when paying the ATO?

Payments can be made through EasyPay (via the ATO website), through an individual taxpayer’s MyGov account, or through rewards credit card payment services RewardPay and B2Bpay. Surcharges are levied on all these payments, but the last two methods allow rewards or frequent flyer points to be earned at the card's normal rate for non-government transactions.

When does it not make sense to use a rewards card for ATO payments?

Assuming that you are satisfied with the rewards points return you are getting on normal transactions when offset against your card’s annual fee and any other benefits, the additional cost of ATO rewards points lies in the surcharge levied on card payments by the ATO or RewardPay or B2Bpay. The surcharge rates are:

  • ATO (via EasyPay or MyGov). 0.73% for using a Mastercard credit card, 0.78% for using a Visa credit card, and 1.45% for using American Express
  • RewardPay. 2.15% for payments up to $20,000, less for higher payments
  • B2Bpay. 1.2% for standard Visa/Mastercard, 1.55% for premium Visa/Mastercard, 2.2% for Amex cards

So the question you need to ask yourself is: Does the surcharge cost per ATO payment reward point exceed the value of an ATO payment reward point?

In fact, the value to you of any reward point depends not on the type of payment you are making, but the type of redemption you choose. Long-haul flights and business class seats usually offer the best value redemptions, while retail gift cards are amongst the most popular. Exchanging points for merchandise is the least cost-effective, so if this is your chosen redemption method, don't use a credit card to pay the ATO.

A Qantas Economy return flight to the UK, if booked well ahead, currently costs around $1,460 for a base fare (i.e. excluding taxes) or 110,400 Qantas Frequent Flyer points. This puts a value of about 1.3 cents on each QFF point. You could extract a value of up to 4.5 points per dollar, or even more in some cases, by flying Business Class long-haul. (You can find more ideas for redeeming your points in this article.)

A $100 retail gift card costs 20,000 American Express Membership Rewards points, valuing each point at around 0.5 cents. It could be possible get a better return by exchanging rewards points for frequent flyer points if your card offers a good exchange rate.

But, generally speaking, frequent flyer points need to cost less than 1.3 cents each in surcharges to be worthwhile, and rewards points need to cost less than 0.5 cents, before the cost exceeds the value.

Let's say you have a tax bill of $1,000. Your surcharge costs would be:

  • EasyPay/MyGov using Mastercard. $7.30 pre-tax, $5.11 post tax
  • EasyPay/MyGov using Visa. $7.80 pre-tax, $5.46 post tax
  • EasyPay/MyGov using Amex. $14.50 pre-tax, $10.15 post tax
  • RewardPay using Amex. $21.50 pre-tax, $15.05 post tax
  • B2Bpay using standard Visa/Mastercard. $12.00 pre-tax, $8.40 post tax
  • B2Bpay using premium Visa/Mastercard. $15.50 pre-tax, $10.85 post tax
  • B2Bpay using Amex. $22.00 pre-tax, $15.40 post tax

You can work out the earning rate your card needs to have by dividing the value of 1000 points ($13 for frequent flyer points, $5 for rewards points) by the above costs for a $1,000 payment. For business credit cards, use the post tax cost because the net cost to you is reduced by its likely tax-deductibility.

For frequent flyer points cards the required earning rates to make it worthwhile are as follows:

  • EasyPay/MyGov using Mastercard. 0.6 points per dollar for personal card, 0.4 points per dollar for business card (for government payments in both cases)
  • EasyPay/MyGov using Visa. 0.6 points per dollar for personal card, 0.5 points per dollar for business card (for government payments in both cases)
  • EasyPay/MyGov using Amex. 1.2 points per dollar for personal card, 0.8 points per dollar for business card (for government payments in both cases)
  • RewardPay using Amex. 1.7 points per dollar for personal card, 1.2 points per dollar for business card (for standard purchases)
  • B2Bpay using standard Visa/Mastercard. 1.0 points per dollar for personal card, 0.7 points per dollar for business card (for standard purchases)
  • B2Bpay using premium Visa/Mastercard. 1.2 points per dollar for personal card, 0.9 points per dollar for business card (for standard purchases)
  • B2Bpay using Amex. 1.7 points per dollar for personal card, 1.2 points per dollar for business card (for standard purchases)

It would be difficult to find a Mastercard or Visa offering frequent flyer points at more than 0.5 cents per dollar for government payments, or an Amex card offering more than 1.0 points per dollar for government payments. So EasyPay/MyGov payments are probably ruled out for personal cards (unless you're getting a great value per point by flying long-haul Business Class), but could be OK for business cards. For RewardPay and B2Bpay, you'll need to compare your card's earning rate for standard purchases to see if it meets the above requirements. Using Amex cards with B2Bpay is the least likely to make the cut.

For rewards points cards the required earning rates to make it worthwhile (if exchanging points for retail gift cards) are as follows:

  • EasyPay/MyGov using Mastercard. 1.5 points per dollar for personal card, 1.1 points per dollar for business card (for government payments in both cases)
  • EasyPay/MyGov using Visa. 1.6 points per dollar for personal card, 1.1 points per dollar for business card (for government payments in both cases)
  • EasyPay/MyGov using Amex. 2.9 points per dollar for personal card, 2.1 points per dollar for business card (for government payments in both cases)
  • RewardPay using Amex. 4.3 points per dollar for personal card, 3.1 points per dollar for business card (for standard purchases)
  • B2Bpay using standard Visa/Mastercard. 2.4 points per dollar for personal card, 1.7 points per dollar for business card (for standard purchases)
  • B2Bpay using premium Visa/Mastercard. 3.1 points per dollar for personal card, 2.2 points per dollar for business card (for standard purchases)
  • B2Bpay using Amex. 4.4 points per dollar for personal card, 3.1 points per dollar for business card (for standard purchases)

Once again, you'll need to consult your card's points earning rates. Both EasyPay/MyGov And RewardPay payments are definitely ruled out if you're exchanging for gift cards, but B2Bpay payments might just make it if you use a Visa or Mastercard.

Why is the earn rate lower for ATO payments?

Banks recognise that ATO and other government payments are among the largest payments an individual or business is likely to make where a credit card is accepted and can be used without any significant penalty (such as reduced ability to negotiate a favourable price, which might happen with a car purchase, for example). This would certainly erode the banks’ overall profit on credit card transactions if they allocated points at the same rate as for standard, lower-value payments. Rather than apply more restrictive points caps (which would reduce a card’s general appeal) banks target government payments by either offering a lower earning rate or excluding them altogether.