How to earn frequent flyer points when paying income tax, HECS

How to earn frequent flyer points when paying income tax, HECS

Nobody likes paying tax, but savvy travellers can earn enough frequent flyer points on their tax bill to take a free flight or an upgrade to business class.

All you need to do is use the right credit card to settle your personal income tax obligations or chip away at that lingering university HECS debt.

Those points do come at a price – the ATO levies a surcharge of 0.42% for Visa and MasterCard a higher 1.45% for American Express when paying via its website. But for a large-enough tax bill you can rake in more than enough points to come out ahead.

Not every credit card offers points on ATO transactions, but here are five of the best that do.

1. ANZ Frequent Flyer/Rewards Platinum, Black

With ANZ’s Frequent Flyer Platinum and Black American Express cards each pulling in an impressive 1.5 Qantas Points per dollar spent and the bank’s Platinum and Black Rewards cards delivering the equivalent of 1.5 Velocity Points, all are worthy contenders when fronting the tax man.

As a sweetener, the ANZ Rewards Black Visa also earns a solid one Velocity Point per dollar spent after converting points across from ANZ to Virgin Australia, while the other companion Visas earn between 0.5 and 0.75 airline points per dollar.

There’s no limit to the number of points you can earn via the ANZ Rewards Platinum, ANZ Rewards Black and ANZ Frequent Flyer Black cards, although the ANZ Frequent Flyer Platinum card pays out points only on the first $6,000 spent on each the AMEX and the Visa per statement period.

You’ll pay no annual fee in the first year for any of these cards, although be aware that from February 27 2016 ANZ will cease awarding points on all ATO credit card payments: so if your plans involve paying down your HECS debt, get in before then to earn those valuable points.

At the top end of the scale a 1.45% AMEX surcharge would see you ‘buying’ each Qantas or Virgin Australia Velocity point for $0.0096, while the 0.42% surcharge to use the Rewards Black Visa lowers the ‘cost per Velocity point’ to just $0.0042 but delivers fewer points overall.

2. Qantas Credit Union Visa Platinum card

Also high in the rankings is the Qantas Credit Union Visa Platinum card, reeling in one Qantas Point per dollar spent, uncapped.

There’s an annual fee of $195 – payable from year one rather than waived as with ANZ – and with the ATO’s 0.42% surcharge for Visa transactions, you’re parting with $0.0042 for every Qantas Point earned after shelling out for that yearly charge.

3. AMEX Qantas Discovery, Velocity Escape

With no annual fees, no points capping and reasonable earning rates of one point per dollar spent, the Qantas American Express Discovery and the American Express Velocity Escape cards shouldn’t be overlooked.

They’re also the highest earners for tax payments when compared to other American Express-issued Qantas and Virgin Australia cards, and even the by-invitation Centurion card – all of which cut points earning to just 0.5 per dollar on ATO payments with annual fees to boot.

Each Qantas or Velocity Point costs $0.0145 through the 1.45% AMEX surcharge: certainly higher than some other options, but with no frills or annual fees these parity-earning cards suit people who want to earn some points, but can’t justify paying hundreds each year for a piece of plastic.

4. Bankwest Qantas Platinum MasterCard

Fractions of frequent flyer points can still add up to a decent total, as Bankwest’s Qantas Platinum MasterCard highlights with an earning rate of 0.75 Qantas Points per dollar spent with the ATO and also everywhere else.

Over a year you can collect up to 200,000 Qantas Points – corresponding to $266,667 spent on the card – with a comparatively small annual fee of $160.

All up, with the 0.42% credit card surcharge each Qantas Point is costing you $0.0056, plus your $160 annual fee.

5. Woolworths Qantas Platinum Visa

The Woolworths Qantas Platinum Visa card may be a better fit for lower overall spenders with the number of points earned per dollar varying based on your monthly statement total.

Charge between $1 and $2,500 each month and you’ll net one Qantas Point for every dollar spent, including on ATO payments, although go beyond that threshold and any further transactions receive just 0.5 Qantas Points on the same.

After paying the $139 annual fee ($99 in the first year), ATO charges under the $2,500/month ceiling give a cost per point of $0.0042, reverting to $0.0084 once crossing that line: still a lower cost per point than any of the AMEX options, but again with fewer points earned overall.

Also read: Five credit card strategies to maximise your points

Follow Australian Business Traveller on Twitter: we're @AusBT

Chris Chamberlin
Chris Chamberlin is a senior journalist with Australian Business Traveller and lives by the motto that a journey of a thousand miles begins with a single step, a great latte, a theatre ticket and a glass of wine!
 

28 comments

  • auspointer

    auspointer

    24 Nov, 2015 11:27 am

    Shouldnt this article be re-titled "The five best credit cards for paying your income tax to earn Qantas points"? 

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  • Chris Chamberlin

    ChrisCh

    24 Nov, 2015 11:35 am

    Nope. Too many characters for a headline, and there are four cards included in the list which can earn Virgin Australia Velocity Points (ANZ Rewards Black AMEX, ANZ Rewards Platinum AMEX, ANZ Rewards Black Visa, AMEX Velocity Escape).

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  • auspointer

    auspointer

    24 Nov, 2015 12:09 pm

    OK, so what about other airlines?  Using your David Jones Platinum Amex allows you to earn 1 MR point per dollar that you can transfer to a multitude of airline partners inluding SGP (albeit you get slugged with a 1.45% surcharge).  Also there's the Diners Club World MasterCard that will earn you 1.25 points per dollar that you can transfer to a mulitude of airline partners incl. AA and SPG and the ATO surcharge is 0.42%).

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  • Chris Chamberlin

    ChrisCh

    24 Nov, 2015 12:18 pm

    The David Jones AMEX cards earn 'David Jones Membership Rewards points' which convert on a 2:1 basis to the major airlines (eg. 2 DJMR points = 1 Virgin Australia Velocity point), so you're still earning 0.5 frequent flyer points per dollar (earning 1 DJMR point per $1 spent) but paying the higher AMEX surcharge.

    The Diners Club World MasterCard doesn't award points on ATO payments which is the same of all cards backed by Citibank (such as Virgin Money, Suncorp etc etc).

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  • riley

    riley

    24 Nov, 2015 11:58 am

    If Qantas have the best card partnerships for eanring points when paying the ATO, then the consumer should know that. The numbers don't lie!

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  • Stuart Jackson

    Stuart Jackson

    24 Nov, 2015 12:40 pm

    If Government charges means paying your tax then the Bank West card is out. Section 5 of the t & c

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  • Chris Chamberlin

    ChrisCh

    24 Nov, 2015 12:44 pm

    'Government charges' != 'payments to government bodies', otherwise you'd never earn points at Australia Post, on your car registration, city parking, drivers licences and so on.

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  • Stuart Jackson

    Stuart Jackson

    24 Nov, 2015 12:48 pm

    Good to go then !

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  • sdtravel

    sdtravel

    24 Nov, 2015 12:46 pm

    Anz black cards will no longer earn points after February next year as i understand it 

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  • Chris Chamberlin

    ChrisCh

    24 Nov, 2015 12:50 pm

    Correct – from the article above: "from February 27 2016 ANZ will cease awarding points on all ATO credit card payments"

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  • PETER  LEWIS

    PFJL

    24 Nov, 2015 02:35 pm

    Some cards define BPAY payments as inelgible and points cannot earned. Is a payment ot the ATO a BPAY payment?

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  • Chris Chamberlin

    ChrisCh

    24 Nov, 2015 02:52 pm

    Not when paying via the ATO website, no.

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  • mos

    mos

    24 Nov, 2015 05:24 pm

    It's hard to keep track of all the changes with these cards - but for those who have one, I just checked and Westpac Earth Black Amex cards earn 0.75 Qantas points per dollar on ATO payments - half the earn of non-ATO payments (but I don't think Westpac are issuing these to new customers any more).

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  • Chris Chamberlin

    ChrisCh

    24 Nov, 2015 07:10 pm

    Hi mos, you're correct – Westpac replaced its Earth Black cards with Altitude Black for new customers, while existing customers can continue to use Earth Black.

    Via the Altitude Black AMEX, cardholders can earn 0.75 Qantas Points per dollar on ATO payments (when choosing the Altitude Qantas rewards option), or can earn 1.5 Altitude Points on the same (when choosing Altitude Rewards) which are equivalent to 0.75 Velocity Points.

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  • Darrenj

    Darrenj

    26 Nov, 2015 06:29 pm

    After 2 phone calls to the ANZ Bank over a 24 hour period recently (this week) I have been informed that the bank no longer awards QF points on ATO payments on the ANZ Qantas FF Amex or Visa Platinum cards. This was stopped months ago both banking consultants mentioned. So, I am a bit confused as to what is now correct. 

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  • Chris Chamberlin

    ChrisCh

    26 Nov, 2015 06:41 pm

    Simply, both banking consultants were wrong – if you have one of these cards, check this month's credit card statement (or next month's if your statement comes earlier in the month) for an enclosure that details an update to the Terms and Conditions governing the product, which will show that points on ATO payments will cease from February 27 2016.

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  • ably

    ably

    27 Nov, 2015 12:33 am

    Does an ATO payment not come under the general heading of "government charges"?

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  • Chris Chamberlin

    ChrisCh

    27 Nov, 2015 10:03 am

    This question was already asked above.

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  • Csab

    Csab

    27 Nov, 2015 09:18 am

    I have checked and read all T&C, and it looks like no card will reward points for government charges, 

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  • Chris Chamberlin

    ChrisCh

    27 Nov, 2015 10:05 am

    This distinction was addressed above as 'government charges' are generally not defined 'payments to government bodies' – perhaps you'd like to try a small ATO payment first (such as $10) to see where your card stands.

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  • Darrenj

    Darrenj

    1 Dec, 2015 02:33 pm

    Good news! Despite what two employees said, I paid some of my tax (ATO) on the ANZ Bank Qantas FF Platinum Credit Card and can confirm that I have earned points at 1.5 for the payment. Though a relative of mine did receive her statement and it was clearly stated on the revised conditions from 27 Feb 2016 such payments will no longer earn points. Advice: pay your tax before 27 Feb to earn such points. Thanks Chris for your reply previously and it's a pity that ANZ Bank staff don't know the correct answers! 

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  • sm888

    sm888

    24 Feb, 2016 10:55 am

    I wish to use a Bankwest Qantas Platinum Mastercard for ATO spend, and also NSW Office of State Revenue (land tax). I note the comments previously on 'government charges' which Bankwest exclude from points earn in their terms and conditions. 

    I spoke with two people from Bankwest this morning to clarify that I would earn points on these transactions. The first said she could not say (refering me to QFF, who in turn referred me back to the bank), and the second said an outright 'no' as this would be a government charge. 

    Does anyone have recent experience with being awarded points for ATO spend and/or NSW Office of State Revenue spend with the Bankwest Qantas Platinum card? It seems to take about a month for points to go through to QFF so unfortunately it would take some time to test it with a small payment.

    Many thanks in advance  :-)

     

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  • Vivianne Vandenberg

    veevee

    22 Jul, 2016 11:08 am

    I would like to know if you tested it with BankWest and what happened? 

    Anyone worked out if paying ATO tax is the same as a government charge?

    thanks

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  • Pierre Dreyer

    pdreyer003

    14 Oct, 2016 03:38 pm

    Just wanted to see if you managed to get an answer on this? I am considering this card but want to know if you get points for ATO payments?

    Appreciate any insights you can provide.

    Regards
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  • Deirdre

    flyer72

    28 Mar, 2016 11:36 am

    ANZ Frequent Flyer/Rewards Platinum, Black has stopped allowing you to pay ATO as a purchase. I got stung nearly $300 between cash advance and interest on cash advance last statement. Could you provide an updated list of what banks do allow you to pay ATO using qantas or virgin cards?
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  • Chris Chamberlin

    ChrisCh

    28 Mar, 2016 01:09 pm

    Hi Dierdre, ATO payments from ANZ cards can still be processed as purchases via the ATO website but no longer earn points. Did you perhaps pay via BPAY instead? As ATO doesn't accept BPAY 'credit card' payments, this would have been processed as 'cash' from the card and thus a cash advance.

    Thank you also for your suggestion. AusBT articles are provided 'as correct' on the publication date (in this case, November 24 2015), and aren't kept updated as 'live' resources (as we have thousands of published articles, this task would be a full-time job in itself!). Please feel free to look into the other cards we've named in this article, of which we're not aware of any changes to ATO payments.

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  • kinglear

    kinglear

    13 Apr, 2016 06:32 am

    I have received the Qantas Credit Union (now Qudosbank) Platinum VISA card after a very lengthy and painful process - to find out that it is even more painful to pay my large tax bill with it via the ATO website. Despite a high credit limit of 50K I can "only" process an amount of up to 10K and after that it does not even let me process another one. There seems to be a problem on the bank's side as it comes up with message

    "Transaction Error

    Contact your card issuer. We were unable to process your payment."

    Very painful if you have to makes some big payments and only have a limited time to do them... Anybody else had this problem?

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  • Leanne Wickenden

    LeanneW

    28 Apr, 2016 05:06 pm

    Can you pay tax with the Qantas Frequent Flyer Prepaid Platinum Mastercard and if so, will the transaction earn points and how many per $ ?

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