OzBargain Way to Pay Large Tax Debt?

I'm sure theres plenty of people here that can relate to this topic….

I have a large tax debt to pay off and wanting to know whether I should pay it using a credit card for the points (abeit there is a surcharge for paying with credit cards and I'm not sure if its even worthwhile to me) or just pay it off normally using a savings account and get no points

OR I have read up on here that some people have tried to buy at discount mastercards/eftpos cards with egiftcards? but not 100% sure how this works maybe someone can chime in.

If you are your paying your ATO bills using credit card what one do you use?

TLDR: How you do pay off your tax debt

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Comments

  • -3

    Why would you increase your debt on an existing amount by paying with credit?

    Your best option is to pay it off as soon as possible. Speak to the ATO about a payment plan as early as possible and adjust your budget accordingly.

    • I have the funds to pay it off, its a matter of how should I do it to reap some sort of reward if possible

      • +2

        Personally I'd try and enter into a payment arrangement with the ATO to cover the debt.
        That way you pay it off over time and get the benefit of any interest you accrue.
        Just make sure you don't get hit with GIC or penalties.

        • I am a tax accountant and have never seen the ATO agree to a payment plan that doesn't include interest. It is sometimes possible to get the interest remitted after full payment of the debt, but can be a pain and also is possible for them not to remit if you are continually late…

        • +1

          @Faithgrrl: I have always had the ATO remit interest even when I didn't ask for it.

        • @oodian: Yes, I have also always had the ATO remit interest, on personal income tax debts. when paying off on a payment plan

  • +1

    I am not the most informed on this, however it is important to check the T&C's for certain reward cards, as for ATO payments they will only give you half the amount of points rather than a normal spend. Certain cards won't do this, you'll have to do some digging.

    If you do anything, sign up for a new card that is going to offer a decent bonus for the first spend. Sounds like you'll clear the minimum spend for the bonus.

    • Great point. ANZ Black card used to give points for ATO payments - I believe they no longer do this

  • +1

    When I had to pay the ATO for BAS (business tax), I recall them not accepting credit as a payment method - it had to be BPAY or bank transfer. Is this still the case? And I also tried to BPAY from my credit card, my bank wouldn't let me do it either.

    Also when I had to pay a large tax debt as well I asked to be put on a payment plan, and get the interest waived, even though I could have paid it off in one hit. Better to have the money in my account earning interest (or maybe offsetting a mortgage interest) than sitting in their coffers… :D

    • Sorry for the tangent, but you reminded me of the strange ATO games possible. One of my employers didn't put aside HECS as they should meaning I had to pay at the end of the financial year rather than monthly during the year…better for me (but wasn't my choice). I did the tax return and HECS was going to be a lot, so instead I paid HECS lumpsum direct and got the 15% bonus for paying 'early' even though it was the latest possible, just slightly before lodging my tax return. So employer didn't set aside HECS as they ought, I pay after the financial year and get the 'early' bonus.

      • +1

        Had an official email from the University this week. Sounds like they finally had the law passed…

        "From 1 January 2017, the Australian Government will remove the upfront HECS-HELP discount of 10 per cent for eligible students that pay their student contributions upfront and the voluntary HELP repayment bonus of 5 per cent."

    • Hi I always thought that way: bank transfer and Bpay. However I see from last activity statement it appears credit card is an option as well, with link provided to pay, in that link it specifiy card processing fee MAY apply - thus if it's no fee, it should be good for us, but if there is a fee, we better stick to Bpay and netbank.

  • Cc surcharge is more than the points are worth. And FYI cc fees are not tax deductible

  • +2

    You can enter a payment plan with the ATO, where whatever you owe is spread over months. Once you start paying the plan, they don't appear to charge any additional interest to what you would currently owe, as long as you make all payments by the agreed date(s). I have done this several times for up to 9 months.
    If you pay via the ATO website, you will incur additional fees for credit cards, but if you make payments through an Australia Post branch, you can pay with most any card, and no additional fees.
    I have done it this way to maximise the ING paywave cash back (sadly that promotion ended).

    • I thought at the post office they would surcharge you for paying with credit card?

      what card are you using now or are you just paying it all upfront? yea sad ING is gone now, I know some cards give you some cashback albeit very tiny but a saving of a few hundred is well worth the time.

  • I am always payable and my friends give me crap about it. It's soooo hard to explain that technically speaking, being payable is better than getting a refund. I used to pay by credit card and do balance transfer trickery but giving that a rest this year due to the effect on my credit rating.

  • -1

    Paying with Westpac Black Mastercard (0.54% surcharge) could be better than AMEX (1.45% surcharge). See http://www.creditcardfinder.com.au/pay-your-tax-bill-by-cred…

    Eg, $10,000 ATO tax or HECS payment
    Westpac Black MasterCard - $54 fee - gets you 15,000 points (~$70 Woolies gift card)
    Westpac Black AMEX - $145 fee - gets you 30,000 (~$150 Woolies gift card)
    AMEX Platinum Edge - $145 fee - gets you 5,000 points (~$25 Coles gift card)

    This could be a simple way of meeting a required minimum spend or quickly increasing points. Westpac Black AMEX also have targeted promotion of 10,000 bonus points if you pay at least $500 by end of October 2016.

    • +1

      Assuming that there's not another type of Westpac Black Mastercard I'm not aware of, these calculations are actually:

      Westpac Altitude Black Mastercard - $54 fee - gets you 0 points (you get no points, which is worth $0)
      Westpac Altitude Black American Express - $145 fee - gets you 15,000 points (you can get a $50 Woolies egift card for 9900 points. So 15,000 points is worth about $75)
      AMEX Platinum Edge - $145 fee - gets you 5,000 points (you get a $25 Coles gift card for 3375 points. So 5000 points is worth about $37)

      See section 4.2 of https://www.westpac.com.au/content/dam/public/wbc/documents/…. No ATO points earn on the Mastercard, and only 1.5ppd on the Westpac Altitude Black Amex.

      • Thanks for the corrections. I'd carelessly assumed Westpac (unlike Amex in their Platinum Edge) don't have different rates for ATO point accrual than other spend. You've saved me some unnecessary surcharge fees!

  • Cheap ozbargain airfare to London = problem solved.

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