Inland Revenue Authority of Singapore (IRAS) taxes are a reality of life. There are a number of ways to make tax repayments, but many of us forget that we can pay our taxes via our bank using a credit card. Putting tax payments on a credit card can provide a host of advantages, such as extra reward points.
Use this guide to learn how to pay taxes by credit card. Plus, the advantages, drawbacks and alternatives in case you decide to go a different route.
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In 2020, individuals with income tax obligations had to file their taxes up until 31 May 2020. Tax bills (NOA) were expected to be delivered between late April and September 2020. However owing to the COVID-19 pandemic, IRAS is letting some people defer their 2020 income tax payments by three months (exclusions apply, so do check on the Singapore government’s website for more information).
Paying your taxes with a credit card for the first time involves the following steps:
- Check if you’re eligible. Not all credit cards can be used to pay taxes, so the first step will be to check if your credit card and bank offer a tax payment service. It’s important to remember that the IRAS does not accept credit cards as a form of payment for taxes. When you use a credit card to pay for tax, you are paying the bank, who in turn pays the IRAS for you. Banks will typically charge a processing fee for providing this service.
- Contact your bank. If your bank offers a tax payment facility, then you will be able to begin the process of paying via credit card. The process varies from bank to bank, so you may need to jump online to discover the specific process relevant to your card and bank.
- Look out for fees. If you do find a bank who’ll let you pay your taxes via credit card, you may expect to pay between 0.5% and 3%. (Always check for fees with care – you could meet similar fees if you want to pay road tax by credit card, or pay your property tax by credit card, and so on…)
- Complete the process. In general, you will need to fill in some variation of a tax payment application form. These forms will prompt you to include the relevant personal information and documentation. Payment options, processing fees, card eligibility and reward earning capabilities vary from bank to bank, so be sure to read the terms and conditions before moving ahead.
The following are a number of the benefits to paying your taxes via a credit card. These include:
- Flexible cash flow. If you don’t have the funds on hand to pay your tax bill, using your credit card can be a convenient option. This will allow you to maintain enough cash flow for daily needs without missing the tax repayment. Be sure that you will be able to meet your credit card repayments before going down this path.
- Rewards earnings. If you elect to pay your taxes with a credit card, then you will have the opportunity to earn rewards on the expense. These rewards can take the form of reward points, air miles cashback and more. What rewards you earn will depend on the credit card that you use. If you want to earn a specific type of reward, be sure to pay with a credit card that offers that reward type.
- Convenience. Paying your taxes with a credit card can be a smooth and easy process, especially after you’ve done it for the first time and know how the process works. You may also be able to select a payment scheme that fits your lifestyle, earnings and financial habits.
- 0% interest instalment plans. Your bank may allow you to turn your tax repayment into a 0% interest instalment plan. This will let you break your tax bill down into smaller, more manageable, payment sizes. This can be a very attractive option, as it won’t cost you anything in terms of added interest costs.
- Processing fees. Most banks will charge a processing fee should you elect to use your credit card to pay your taxes. Processing fees are typically calculated as a percentage of the amount of tax owed. While the processing percentage fee may seem low, you’ll want to weigh up this cost against the benefits of any rewards you can get.
- Slow processing times. You’re reliant on your bank to submit all your information and payments to the IRAS on time. Processing times can be slow and may take up to 10 days. Therefore, you’ll want to make sure you’ve planned ahead and have completed all the necessary actions well before the tax deadline hits. If you’re disorganised, or prone to last-minute payments, you may want to think of another option (see below).
- Strained credit limit. Paying your tax bill by credit card essentially means putting a large “purchase” against your card. This can eat into your monthly credit card limit. Before you pay your taxes with a credit card, make sure you’ll have plenty of available finances leftover for other day-to-day expenses and necessities.
- Interest charges. If you push your credit limit too far by charging your tax bill to your card, you could fail to make your regular credit card repayments. This will leave you with unwanted and unplanned interest rate charges attached to your regular credit card bill.
If you’ve decided that a credit card isn’t the best way to make your tax payments, then there are other options to consider.
- CardUp. CardUp works as a middleman between you and the payment receiver, in this case the IRAS. You schedule a payment to CardUp, and they’ll pay the IRAS. You’ll need to sign up for a CardUp account and link a card to that account. All CardUp transactions incur a processing fee of 2.6%. If you want to learn more about how it works, including the positives and negatives, read our CardUp review.
- GIRO. GIRO transfers are a popular tax payment method. GIRO is an electronic direct debit mechanism used to collect payments at a low cost. When you apply online for a GIRO account, you will receive instantaneous approval from your bank. Once you’ve nominated GIRO as your preferred payment method for tax bills, the IRAS will be able to debit your account for the due amount. With GIRO, you can elect to pay your tax bills either as an annual deduction or in monthly, interest-free instalments.
- Bank deposit. You can pay taxes directly from your bank account by selecting IRAS as the billing organisation. You can do this via Internet banking, over the phone, at an ATM or in a branch. You’ll need your tax reference number or your digital payment slip number. Payment processing times can take up to three business days.
- NETS. You can make a NETS payment over the counter at any Singapore Post branch. You’ll need to bring along your payment slip in order to use this method. Processing times can take up to three days, so be sure not to leave it until the last minute.
- SAM kiosks. Kiosks are open 24/7, allowing you to make a tax payment at any time. You’ll need to bring along your payment slip in order to scan the printed barcode or enter the payment slip number. You’ll need a NETS card from a compatible bank to use a SAM kiosk.
- AXS e-Stations and m-Stations. To pay via e-Station, you’ll need to hop onto the AXS website. To pay via m-Station, you’ll need to download the m-Station app. Once you’re online, you’ll need your payment slip number or your tax reference number. You will have to pay via eNETS Debit and you will need to have an existing Internet banking account.
Paying your taxes with a credit card is a cost-versus-reward situation. Be sure to evaluate your finances and the gains and losses you would make by electing to pay your tax this way.
Can I use my cashback credit card for tax payments?
You’ll have to check with your bank about which cards they accept for their tax payment services. It is not uncommon to find cashback credit cards on the disallowed list. If you have a cashback credit card that you wish to make the most of, consider linking it to a CardUp account and paying your taxes that way.
How long will it take to process my payment?
There’s no such thing as an “early payment fee” when it comes to paying taxes, so it’s always best to get in early, regardless of advertised processing times. Most banks suggest that payments will be processed within three working days, but it can sometimes take up to 10. Other payment methods also advertise three working days. If you’re using any physical payment method, such as a printed form, aim to get your tax payments in at least three weeks before they’re due.
What is NETS?
NETS stands for Network for Electronic Transfers. NETS cards have been an integral part in the process of electronic payment adoption across Singapore. NETS offers a suite of payment processing services, including debit card, credit card, online, mobile, GIRO and point-of-sale payments.
Can I pay road tax by credit card?
Yes, you can pay using a VISA or MasterCard credit card. Other options include eNETS Debit (Internet Banking) or an ATM Card. Again, keep an eye out for any fees and charges.
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