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Paying your tax bill by credit card

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The Australian Taxation Office (ATO) allows tax liabilities to be paid by credit card.

By ensuring that you pay the card balance within its interest-free period, you won’t attract interest on the amount. Additionally, you could take advantage of the card’s reward program by receiving the points for the transaction.

However, the ATO is quick to point out that credit card payments are subject to a fee, which is the transaction fee charged by the bank supplying the card to the credit card holder.

The fees are a percentage of the amount you are paying.

Visa or Mastercard        0.48%

American Express         1.25%

When you make your credit card payment, the ATO calculates the fee prior to you confirming the transaction. If you’re unhappy with the fee amount, you can cancel the transaction before it completes.

In some circumstances, you can claim a tax deduction for the card fee.

To make card payments to the ATO, you must register for either a Payment Registration Number (PRN) or an Electronic Funds Transfer (EFT) code.

It’s important to note that tax liabilities, like any other debt, should be paid by the due date to avoid incurring penalties, this includes credit card interest.

Speak to your Bongiorno adviser if you’d like to know more about this ATO facility.

As this general advice has been prepared without taking account of your objectives, financial situation or needs, you should consider the appropriateness of this advice before acting on it. If this general advice relates to acquiring a financial product, you should obtain a Product Disclosure Statement before deciding to acquire the product. Bongiorno advisers do not suggest that using credit cards for the payment of debt should be adopted as part of a sound financial strategy.

 

Sources: 
www.taxpayer.com.au Pay all liabilities by credit card (Jan 2012)

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