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

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Chris C.

Chris is a a former contributor to Executive Traveller.