Can you earn rewards points on ATO bills this EOFY?

Find out if you can get rewarded with more than a tax return this EOFY.

Published and information correct as of 12 August 2016

The end of the financial year (EOFY) is approaching and for most people that means one thing: tax time. While many of us can look forward to a financial bonus in the form of a tax refund, some will have to do the opposite and fork out funds to cover tax bills.

If you fit in the latter, there might be a way for you to be rewarded for your payments. Some credit cards allow you to earn rewards points when you use them to pay for your tax bill.

However, many banks have recently changed their credit card rewards programs terms and conditions, adding details of reduced earn rates or excluding ATO (Australian Taxation Office) payments from the eligible purchases that earn points. As these cards are a bit of an endangered species in the credit card world, we’ve found out which cards will let you earn rewards points on ATO payments and how many points you could earn.

According to a recent study conducted by Credit Card Finder, 18.31% of Australians use their credit card to cover their tax bill. However, only 10.59% of Australians are currently using a rewards credit card and earning rewards points on their tax bill. The remaining Aussies either have a credit card but don’t use it for their tax payments (51.88%) or don’t have a credit card at all (29.80%). If you use a credit card regularly and usually pay it off in full each month, a card that lets you earn points on ATO payments could help you get more value from your tax bill this year.

How many points could I earn on my ATO bill?

Unfortunately, fewer and fewer banks allow cardholders to earn rewards points on ATO payments. According to the terms and conditions of the following banks, here are the cards you can still use to earn rewards points on ATO payments.

Full list of the banks that do and don’t allow you to earn rewards points on tax bills

What could I redeem these rewards for?

According to the Credit Card Finder survey, over one third (39.60%) of Australians are likely to save their tax refund and 24.06% would use it to pay bills. Other ways Australians used their tax returns included upgrading on gadgets (2.57%), putting it towards a holiday (10.69%) and shopping (4.46%). If you don’t have a tax refund, like almost 6% of Australians, you might be able to use rewards points to indulge in what some Australians spend their tax refund on.

Say you were using the American Express Platinum credit card to pay a $2,000 ATO bill. At a rate of 0.5 Membership Rewards per $1, you could earn 1,000 points. Some of the examples of rewards you could redeem with these points include:

  • Credit card bills. If you’re the type of person who would use their tax refund to pay bills, some rewards programs could help. You can use your Membership Rewards points (starting from 1,000 points) to get cashback on your account, helping you pay down your balance. Some cards also let you use points to pay off your annual fee, so that’s another option.
  • Shopping. If you would regularly use your tax refund for some retail therapy, you could use your points for shopping on the rewards program’s online store, or with a partner retailer. But 1,000 points won’t get you particularly far if you’re using your Membership Rewards at American Express’ partner David Jones. If you wanted to buy a MAC lipstick, for example, you’d need 4,860 points.
  • Gadgets. Similarly, you can also use your rewards points to redeem gadgets on the online store or with a partner retailer. If you were using an American Express Platinum card, though, you wouldn’t be able to redeem much with your 1,000 Membership Rewards. Instead, you’d have to use points and cash to make up the difference in the cost of the reward, but that could still save you some money compared to purchasing items outright.
  • Travel. If your have a frequent flyer credit card, you could be able to earn frequent flyer points directly from your ATO payment. If you have an indirect earn rewards card, such as the American Express Platinum, you’ll need to transfer your credit card rewards to the relevant partnered airline frequent flyer programs. Otherwise, you could redeem your rewards for a flight through Webjet.

How many points you’ll need for a redemption will depend on your destination, the fare type and when you book the flights. For example, if you were to transfer your Membership Rewards to your Velocity frequent flyer account, you’d need at least 7,800 for an economy one-way flight from Sydney to Melbourne. So if you only had 1,000 Membership Rewards from your tax payment, you’d need to use cash or existing rewards points to make up the difference. Most airlines host frequent flyer point calculators on their websites, so you can use these to see how far the rewards from your ATO bill can take you.

How to use your credit card to pay your ATO bills

How do I know if I can earn rewards points on ATO payments?

Usually this information is available in the terms and conditions document relating to the relevant rewards program or in the product disclosure statement for your card. Please note that there is a difference between government payments (which payments to the ATO fall under) and government charges though, as the latter doesn’t usually earn rewards points. If you’re unsure, it’s best to consult the relevant documents or to get in touch with your bank to make absolute sure whether or not you can earn points from ATO payments.

Caucasian woman holding a credit card and giving thumbs up

Is it worth it?

If your card does allow you to earn rewards points on ATO payments, it could be a worthwhile way to bolster up your points balance and get some extra rewards from a necessary cost. Whether or not it’s worth it depends on the card you’re using, the amount you owe the ATO and the types of rewards you want to redeem. With the American Express Platinum card and a tax bill of $2,000, it’s clear that the 1,000 points won’t get you very far. If you already have a rewards credit card, earning points for a tax payment could be an added bonus. Otherwise, you might want to reconsider getting a credit card to earn rewards for EOFY expenses.

It’s also important to note that the ATO charges a surcharge on credit card payments. If you’re using a Mastercard or Visa payment, you’ll be charged a 0.42% surcharge. If you have an American Express card, you could be hit with a surcharge worth 1.45% total you pay. While earning rewards points could be worthwhile, make sure that the value of the rewards aren’t outweighed by the cost of these surcharges.

If you have a tax bill due at the end of this financial year, a rewards credit card could be an easy way to get something back for a necessary cost. But if you don’t consider the costs that come with using your credit card for ATO payments, you could end up losing out. Before you use your credit card to pay an ATO bill, make sure to check whether surcharges apply and whether it’s considered an eligible purchase to earn rewards.

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