ATO (tax office) payments by credit card

[medhead]

Doesn't fringe benefits only apply to employees?




Sent from the Throne

 

[The Rok]

Doesn't fringe benefits only apply to employees?




Sent from the Throne

Not necessarily, where the benefit is derived by the employee as a director/owner of a company then the ATO will argue that FBT is payable. As there seems to be a large contingent of Company Owner's/Directors here I suspect that they would be the ATO's primary target should they decide to enforce this.

The real issue here for the ATO, and I suspect the reason for no enforcement of this rule is How does one quantify FF points? It's easy for those of us on AFF to quantify & calculate our value of FF points based on our personal circumstances, but the same cannot be said for the rest of the country.

But as I said before, The ATO would be quite happy to let this run as it is an incentive for people to pay taxes on time. In fact, I am surprised they are not advertising it left right and centre…

 

[burmans]

I haven't benefitted at all from this thread. No new information contained that I did not already know.

Reason why i am advocating for this to be deleted is due to the fact that there are many people running about on this thread advocating the use of CC's to pay business taxes for the purpose of earnings FF points. I have tried to hint subtly but let me point out something very clearly

As per this ATO practice statement and these few links:
Rewards received under consumer loyalty programs
PS LA 2004/4 (GA) - Income tax and fringe benefits tax - rewards received under consumer loyalty ... (As at 14 July 2004)
www.bdhco.com.au/files/docs/loyaltyprograms.pdf


Excessive points accrued via business expenses could i) be treated as business income or ii) subject to FBT.
So, in the case of someone redeeming 1m FF points a year (say) and redeeming for 8 x J return tickets SYD-SIN. Nominal value of the flight is say A$5K = $40K in yearly additional income to be taxed (technically, the calculation should be 70% of the full published fare of the J ticket).

Doesn't apply if you are paying personal tax or HECs though...

So, has anybody thought through these implications? Could this thread possibly cause the ATO to clamp down on this and / or the credit card companies to stop awarding points for ATO payments? Probably not, but who knows.

We got the hints but do you have any evidence of this actually being applied in practice?

 

[wafliron]

I don't think selfish is the right term, I think we all love to share here amongst the AFF community, the problem is that google bots make nearly all of this information available to anyone including the authorities and companies who are not so willing to share the booty perhaps.

I don't agree personally - we all post here with full knowledge that the information will be in the public domain, indexed by Google, etc. Clearly Your Milage Does Vary though

Doesn't fringe benefits only apply to employees?

IIRC, I think those links talk about the risk of redemptions being treated as income, not a fringe benefit.

Selfish? Maybe.

Unsustainable? Almost certainly, and the more people that pay the ATO on CC, the bigger the problem and the more pressure there will be on the CC companies to do something.

ATO/Optus/Visa charge us 0.48% to pay by Visa and then Citibank Select gives us 1.333 Krisflyer points per dollar (1.33%). Doesn't add up.

They would all not be doing it ( The ATO and the C/Card companies) unless the numbers worked.

They all win and the smart ones ( us ) win as well. in the overall scheme of things the points would be miniscule for them but major for us. Enjoy it whilst we can

I personally also think it's unsustainable... there's no doubt the numbers work for the ATO as it costs them nothing, but I'm not so sure about the CC companies - I think most of them just haven't realised that the numbers don't work yet, or don't know quite how to deal with it. I hope I'm wrong - but definitely living by the motto "make hay while the sun shines" just in case!

I haven't benefited at all from this thread. No new information contained that I did not already know.

Really? Nothing at all? I also knew about this option prior to reading this thread, but I've certainly still benefited from it - info on the best cards use, shared experiences re which cards are / are not OK to run tax through, strategies for paying tax bills bigger than available CC limits, etc.

If your answer really is "no, nothing at all", then I apologise and withdraw my comment. The general point still stands though - even if it doesn't apply to you, it would be unfair to many others delete this thread.

Reason why i am advocating for this to be deleted is due to the fact that there are many people running about on this thread advocating the use of CC's to pay business taxes for the purpose of earnings FF points.

...

So, has anybody thought through these implications? Could this thread possibly cause the ATO to clamp down on this and / or the credit card companies to stop awarding points for ATO payments? Probably not, but who knows.

I've certainly thought through them - can't speak for others though, of course. In my case almost all the points I've burned so far been used for business-related travel (allowing me to travel in greater comfort than I otherwise would) so I'm comfortable with it both legally and ethically. For others where this is not the case I guess it's a risk they choose to take. Could this thread lead to an ATO clamp-down? I guess it's possible... highly unlikely though IMHO.

Also, on a completely different note, I had no issues earning points on the recent BAS/PAYG/company tax payments on both my CBG and Select - just mentioning that given the discussion about these cards a few days ago.

 

[Newk]

LOL. WE could let this thread sink to the bottom? But we just cannot help ourselves

(and yes I did know about "this" before I came to AFF)

 

[sumthinfornuthin]

I knew it all too before this thread appeared BUT the multiple comments about best cards etc and what other people think and what they consider the best way to approach it is the real GOLD in this thread in that it reinforces whether or not we are going about it in the right way and is what AFF is all about.

I don't think there is any way this will be knocked on the head by the CC Companies or the ATO:

Taxes are being paid and the tax debt liability is being transferred from the ATO to the CC companies if people don't pay their cards off.

I am sure the fees cover the actual cost as more than likely the CC companies have been cut to the bone by the ATO but at the end of the day everything in business revolves around volume and even if the margins are slim the dollar profits will be high if the volumes are high and don't forget that the average individual dollar transaction for these ATO payments would be quite high compared to the average dollar transaction for most uses of cards eg 2 bottles of milk etc. So the handling costs for the card companies per dollar of ATO transaction would be much more effective..

Into the forseeable future I reckon it is a WIN/WIN/WIN arrangement.

At the end of the day the T & C's for the FF programs all say the points have no cash value and that would certainly be the argument if FBT issues were to rear it's head with the ATO.

The benefits for the ATO in relation to improved collections must be enormous.

 

[wafliron]

I am sure the fees cover the actual cost as more than likely the CC companies have been cut to the bone by the ATO but at the end of the day everything in business revolves around volume and even if the margins are slim the dollar profits will be high if the volumes are high and don't forget that the average individual dollar transaction for these ATO payments would be quite high compared to the average dollar transaction for most uses of cards eg 2 bottles of milk etc. So the handling costs for the card companies per dollar of ATO transaction would be much more effective..

We shall have to agree to disagree. I personally don't see how 0.33% (minus Visa / Master's cut) could be covering costs for the CC companies - as I said, I hope I'm wrong though

At the end of the day the T & C's for the FF programs all say the points have no cash value and that would certainly be the argument if FBT issues were to rear it's head with the ATO.

If you read some of the links posted recently, you'll see that this has been dealt with by the ATO: the "threat" is to tax at the point of redemption, and tax based on the value of the redemption (which isn't hard to figure out to a reasonable degree of accuracy).

 

[amaroo]

I learnt it all here

Lucky enough to have an array of cards that still earn the points. AFF, the thread & the members that have contributed - have done a great service to humanity & the flying community.

When or if, it ends....C'est la vie

 

[KLN]

no probs at all Princess Fiona. have been doing both Business and Personal, even other people's Personal.

 

[perthtraveller]

Hi all

I am close to maximum points earn on my AMEX Charge, Reserve and Citi Platinum credit cards and need some advice on getting another card to put through large personal and small business transactions (obviously including material ATO payments). I am unwilling to upgrade my Citi Platinum to Select as I am receiving 2 bonus points per $1 spent (higher earn rate than Select, but capped) with no annual fee.

I know most, if not all, AMEX cards do not allow points to be earned on business ATO payments but which turn a blind eye.

Apologies - this has probably been covered in this thread but I don't have the time to trawl through 135 pages of threads.

Cheers

 

[Flashback]

Hi all

I am close to maximum points earn on my AMEX Charge, Reserve and Citi Platinum credit cards and need some advice on getting another card to put through large personal and small business transactions (obviously including material ATO payments). I am unwilling to upgrade my Citi Platinum to Select as I am receiving 2 bonus points per $1 spent (higher earn rate than Select, but capped) with no annual fee.

I know most, if not all, AMEX cards do not allow points to be earned on business ATO payments but which turn a blind eye.

Apologies - this has probably been covered in this thread but I don't have the time to trawl through 135 pages of threads.

Cheers

Could you not just get a Select in addition to your Platinum?

 

[sumthinfornuthin]

Could you not just get a Select in addition to your Platinum?

Woolworths EDR credit card

 

[perthtraveller]

Could you not just get a Select in addition to your Platinum?

I never thought of that. Is that possible?

I am 75% through my anniversary year so I am thinking about a lower annual fee card to get me through to the renewal of my existing cards...

 

[perthtraveller]

Woolworths EDR credit card

I am pretty sure the EDR card does not allow large business transactions and will not credit points...?

Also not keen on QFF points.

 

[Flashback]

I never thought of that. Is that possible?

I am 75% through my anniversary year so I am thinking about a lower annual fee card to get me through to the renewal of my existing cards...

I can't see why not.... it should probably be your option going forward also as a lot of the AMEX cards now only pay 0.5 points/$1 for ATO payments.

 

[Duffa]

I am unwilling to upgrade my Citi Platinum to Select as I am receiving 2 bonus points per $1 spent (higher earn rate than Select, but capped) with no annual fee.

How did you score two bonus points per dollar?
I have Citi Select and Citi Platinum Signature and no bonus points anywhere!

 

[wafliron]

I am close to maximum points earn on my AMEX Charge, Reserve and Citi Platinum credit cards and need some advice on getting another card to put through large personal and small business transactions (obviously including material ATO payments).

If you're not keen on QFF points then that rules out a bunch of the obvious contenders, being the 1 QFF point per $1 spent uncapped cards - WOW EDR, HSBC Platinum, Jetstar, Qantas Credit Union, etc.

Some other cards you may wish to consider:

- CitiBank CitiBusiness Gold, if they'll let you have this alongside a CitiBank Platinum - Visa card that earns 1.25 QFF points / 0.83 DJ points / 0.83 KrisFlyer points per $1 spent, with a $200,000pa spend cap. $149/year. EDIT: No longer available :-( See a couple of posts down the thread.

- Westpac Altitude Platinum Plus - Amex/Visa or Master combo which earns 3 Altitude points per $1 spent on the Amex. Altitude points are redeemable, IIRC, for Malaysian Airlines points, KrisFlyer points, Cathay Pacific AsiaMiles and DJ points - I think all at 2 Altitude points to one airline point (1.5 airline points per $1 spent). Fairly expensive at $295/year though, plus needing to use the Amex for good points earn may be limiting.

- Get a CitiBank Select or Signature alongside your CitiBank Platinum, possibly replacing the Amex Plat Charge if you don't want to add another card to your portfolio. You can definitely have a Select and a CitiBusiness Gold, so I assume its possible alongside CitiBank Platinum too.

I am unwilling to upgrade my Citi Platinum to Select as I am receiving 2 bonus points per $1 spent (higher earn rate than Select, but capped) with no annual fee.s

Are these permanent bonus points? Or just until the end of the calendar year? I know a bunch of people - myself included - were offered 1 or 2 bonus CitiRewards points per $1 spent until the end of 2012 on their CBG and CB Platinum cards earlier this year, but I haven't heard of anyone getting this permanently!

 

[perthtraveller]

How did you score two bonus points per dollar?
I have Citi Select and Citi Platinum Signature and no bonus points anywhere!

Persistent negotiations after a good couple of months spend! "No pain, no gain" is definitely an appropriate motto when dealing with Citibank. I've been earning 3.25 Citi points domestically and 5 internationally for this calendar year but offer ends 31 December. We'll see what package I can negotiate then.

Is there a reason why you have both the Select and Signature?

How is Westpac (Altitude and Krisflyer) when it comes to business transactions? Do they enforce their policy?

 

[Newk]

I think the citibank business gold has departed

also have a look at the Diners/mastercard combo

 

[Newk]

Persistent negotiations after a good couple of months spend! "No pain, no gain" is definitely an appropriate motto when dealing with Citibank. I've been earning 3.25 Citi points domestically and 5 internationally for this calendar year but offer ends 31 December. We'll see what package I can negotiate then.

Is there a reason why you have both the Select and Signature?

How is Westpac (Altitude and Krisflyer) when it comes to business transactions? Do they enforce their policy?

I have both these cards and put anything and everything through them with no issue