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Credit card rewards and tax

Who doesn’t love something for nothing?! Well, welcome to the world of reward credit cards, your ticket to receiving freebies for spending money. There are so many types of reward programs from frequent flyer, cashback rewards, travel, and shopping rewards just to name a few.

So each time you spend money on your rewards credit card you earn points. These points can be redeemed for a huge range of products from flights to toasters to a new pair of jeans. The rewards are endless! Now, is the taxman going to come after you for these rewards and benefits you receive? Or is there a positive spin on credit card rewards and tax? Read this guide to learn the ins and outs on tax and credit card rewards. 

Looking for your next card? Compare some of our top cards here. 

Rewards Credit Card Comparison Table - rates updated daily

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    American Express Qantas Ultimate Card

    Receive 60,000 Bonus Qantas Rewards Points when you apply online by 28 May 2024, are approved, and spend $3,000 on your new Card within the first 3 months. T&Cs apply. Available for New American Express Card Members only.

    Rewards program
    Annual fee
    Bonus points
    Earn rate per $1
    Estimated points earned
    Qantas Frequent Flyer
    $450
    60,000
    1.25 points up to 100,000 points/year, then
    1 point uncapped
    Details
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    G&C Mutual Bank Platinum Visa Credit Card

    Receive 50,000 bonus Qantas Points when you apply, are approved, and spend $5,000 on eligible purchases on your new G&C Mutual Bank Platinum Visa Credit Card within 90 days. T&Cs apply. Available to new G&C Mutual Bank Card Members only. Earn 10,000 bonus Qantas Points annually. T&Cs apply. Access Platinum Visa Concierge. Add an additional cardholder at no extra cost.

    Rewards program
    Annual fee
    Bonus points
    Earn rate per $1
    Estimated points earned
    Qantas Frequent Flyer
    $299
    50,000
    1 point up to 20,000 points/month
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    NAB Qantas Rewards Premium Card

    70,000 Bonus Qantas Points. Offer applies to a new NAB Qantas Rewards Premium Card when you spend $2,000 on everyday purchases within 60 days.

    Rewards program
    Annual fee
    Bonus points
    Earn rate per $1
    Estimated points earned
    Qantas Frequent Flyer
    $250 $150 in the first year
    70,000
    0.66 points up to $3,000/month, then
    0.33 points up to $6,000/month
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    American Express Qantas Premium Card

    Receive 20,000 bonus Qantas Points when you apply, are approved, and spend $3,000 on eligible purchases on your new Qantas American Express Premium Card within 3 months of Card Membership. T&C’s apply. Available to new American Express Card Members only.

    Rewards program
    Annual fee
    Bonus points
    Earn rate per $1
    Estimated points earned
    Qantas Frequent Flyer
    $249
    20,000
    1 point uncapped
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    NAB Rewards Signature Card

    Earn 100,000 bonus points when you spend $3,000 on everyday purchases within the first 60 days of account opening and 40,000 bonus points when you keep your card for over 12 months (T&Cs apply). Enjoy a reduced annual card fee (from $295 to $195) for the first year. Up to 44 Interest free days on purchases (T&Cs apply). $15,000 minimum credit limit. 0% p.a. on standard balance transfer (BT) rate for 12 months (3% BT fee applies).

    Rewards program
    Annual fee
    Bonus points
    Earn rate per $1
    Estimated points earned
    NAB Rewards
    $295 $145 in the first year
    160,000
    1.25 points uncapped

Are credit card rewards considered taxable income? 

Reward credit cards are a common way for both businesses and individuals to spend money. With hundreds, if not thousands of points racked up on rewards credit cards, what happens at the end of the financial year?

The good news is, these points remain tax free for now! However, the Australian Tax Office may change this in the foreseeable future, to prevent fraud as people are opening fake accounts in order to earn thousands of reward points. When it comes to redeeming the points for rewards the situation is a little different in relation to tax. Depending on if the reward is personal or business related will determine if tax is applicable: 

Personal: 

The general principle is that personal rewards received from loyalty programs, including flight rewards and cashback are not considered taxable income.

Business: 

When it comes to businesses and employees receiving rewards from credit card loyalty programs it gets a little complicated. It depends on several factors as to whether or not the reward is taxable. If the employee receives a reward such as a flight in lieu of a salary than it may be subject to income tax or fringe benefit tax. We suggest checking out the ATO’s website on taxing consumer loyalty program rewards.

We know that choosing a rewards card isn’t easy given there’s so many options, that’s why Mozo developed the Rewards Revealer Tool. Plug in your annual spend to find a ranking of rewards cards based on your spending level and rewards you're interested in. 

Can you earn credit card reward points when you pay your taxes? 

Earning credit card reward points is pretty easy! Every time you make a purchase, be it shopping for groceries, paying for petrol or booking a flight you can use your rewards credit card to accrue points.  Now we have another way for you to earn points that you may never have thought possible…paying your tax. While you may dread tax time, turn it into a positive, as a chance to earn reward points towards that much needed flight to Melbourne! 

The Australian Tax Office actually states on its website that it would rather taxpayers pay their bill using a credit card. So there’s an opening to use your rewards credit card and earn points towards your loyalty program. There’s an online payment system on the ATO website that processes credit card transactions as a purchase. But be aware, the ATO does charge a surcharge for using your credit card to pay your tax bill. So do the maths and see if the points earned are worth more than what you’ll pay in surcharge. 

Check out Mozo’s guide on avoiding credit card fees and the best credit cards.

Which banks and cards allow you to earn reward points when paying your taxes? 

Not all banks and financial institutions will allow you to accrue reward points when you pay your tax bill by credit card. As it’s an easy way for businesses and individuals to earn lots of points, a lot of banks and providers have abolished or changed the point earnings rate when making payments to the ATO. For example: 

  • Commonwealth Bank: The CBA has put a halt on earning frequent flyer points when making payment to the Australian Taxation Office. If you have a personal credit card with the Commonwealth bank you won’t earn any points towards you rewards program. However, CBA Business Awards customers will continue to receive points when making payments with the ATO. 
  • NAB: If you’re a NAB customer with a rewards credit card you won’t accrue any points when paying the ATO! In May 2015 the NAB put an end to all credit card points earning with the ATO. 
    Amex: You will be able to earn points for your tax payment, but you will incur a surcharge, and your points could be incurred at a different rate.

Other credit cards will have their own systems, so make sure you read the terms and conditions.

It’s important to check with your card provider before assuming you’ll earn reward points come tax time.

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