Alan Baggett
2013-05-07 15:25:51 UTC
Paying your income tax bill with a credit card : CRA SOTW
Plastiq lets you use a credit card to pay taxes owing to the Canada Revenue Agency, but beware high interest rates.
By:Ellen RosemanOn Your Side, Published on Tue Apr 23 2013
David Ades recently did his 2012 income tax return. He found he owed $10,000 to the Canada Revenue Agency.
While most people write cheques to cover any taxes owing, Ades used his CIBC Aerogold credit card and received Aeroplan points in return.
The Canada Revenue Agency is giving taxpayers a plastic option this year — or to be more specific, a Plastiq option.
You can use your Visa, MasterCard or American Express credit card to pay your tax bill if you go through an online payment company called Plastiq.
Ades is chief revenue officer for Boston-based Plastiq , a startup company owned and run by two 23-year-old Harvard University graduates.
Before taking the job, he was senior vice-president of sales and marketing at Moneris Solutions, one of North America’s largest payment processors.
“They’re youngsters,” he says about chief executive officer Eliot Buchanan and chief operating officer Daniel Choi. “In aggregate, they’re still younger than I am.”
Buchanan, born in Edmonton, got the idea of facilitating online payments when he heard his father complaining about having to wire money to the United States to pay for his tuition.
“I could see it was a consumer pain point,” he says. “Credit cards had been around for a long time. Could they be a simpler way to resolve this hassle?”
The problem with credit cards is high transaction costs. Retailers absorb most of these costs, which are a big irritant to the industry.
Most universities don’t take credit card payments in order to keep costs low. Neither do most government departments.
Plastiq was designed to get around the problem. Customers foot the bill by agreeing to a two per cent surcharge. Merchants pay nothing.
Let’s go back to David Ades, who wants to get 10,000 Aeroplan miles for his payment to the Canada Revenue Agency.
“If I buy 10,000 miles directly from Aeroplan, I pay 3 cents apiece or $300,” he says. “If I use Plastiq, I’m paying two per cent or $200.
“I get convenience, points and extra time to pay off the debt. I’m extending my deadline by 21 days by using the float that credit cards offer.”
That’s a great strategy if you have enough cash to pay in full when your credit card bill arrives in May. But if you have to make partial payments, you’re better off avoiding credit cards.
The annual interest rate for standard credit cards goes from 18 to 21 per cent. CIBC Aerogold’s rate is 19.99 per cent for purchases and 21.99 per cent for cash advances, balance transfers and convenience cheques.
You’ll save money using a line of credit to pay your tax bill gradually, especially if you have secured line with a rate of under 10 per cent.
Even better, the Canada Revenue Agency charges only five per cent interest if you need time to pay your taxes owing. It’s one of the best deals around.
Still, Plastiq offers convenience for those who want to use their preferred credit cards to pay their tax bills. You don’t have to register online or carry another card in your wallet.
“In my case, I’m paying $10,000 to the CRA and I’m billed $200 extra on the card I’m using. It’s two separate transactions,” says Ades.
Plastiq has raised $8.25 million from venture capital firms in two rounds of financing. Its goal is to bring credit cards into markets where they haven’t been accepted before.
As well as education and income taxes — H& R Block Canada announced a marketing deal with Plastiq last month — the company plans to get into apartment rentals by working with large property management firms.
“We tried to develop a product that was very simple. All payments happen securely at Plastiq.com,” says Buchanan.
As for Ades, he likes working with a team of young people the same age as his children.
“Half of them show up in hoodies and half in suits. It’s a real mix,” he says.
Ellen Roseman writes about personal finance and consumer issues. You can reach her at ***@thestar.ca or www.ellenroseman.com
-----------------------------------------------------------
Miss a Tax Tale Miss a lot!
Visit the CRA SOTW Library at http://canada.revenue.agency.angelfire.com
------------------------------------------------------------
Alan Baggett – Tax Collector’s Bible - http://taxcollectorsbible.com/
Plastiq lets you use a credit card to pay taxes owing to the Canada Revenue Agency, but beware high interest rates.
By:Ellen RosemanOn Your Side, Published on Tue Apr 23 2013
David Ades recently did his 2012 income tax return. He found he owed $10,000 to the Canada Revenue Agency.
While most people write cheques to cover any taxes owing, Ades used his CIBC Aerogold credit card and received Aeroplan points in return.
The Canada Revenue Agency is giving taxpayers a plastic option this year — or to be more specific, a Plastiq option.
You can use your Visa, MasterCard or American Express credit card to pay your tax bill if you go through an online payment company called Plastiq.
Ades is chief revenue officer for Boston-based Plastiq , a startup company owned and run by two 23-year-old Harvard University graduates.
Before taking the job, he was senior vice-president of sales and marketing at Moneris Solutions, one of North America’s largest payment processors.
“They’re youngsters,” he says about chief executive officer Eliot Buchanan and chief operating officer Daniel Choi. “In aggregate, they’re still younger than I am.”
Buchanan, born in Edmonton, got the idea of facilitating online payments when he heard his father complaining about having to wire money to the United States to pay for his tuition.
“I could see it was a consumer pain point,” he says. “Credit cards had been around for a long time. Could they be a simpler way to resolve this hassle?”
The problem with credit cards is high transaction costs. Retailers absorb most of these costs, which are a big irritant to the industry.
Most universities don’t take credit card payments in order to keep costs low. Neither do most government departments.
Plastiq was designed to get around the problem. Customers foot the bill by agreeing to a two per cent surcharge. Merchants pay nothing.
Let’s go back to David Ades, who wants to get 10,000 Aeroplan miles for his payment to the Canada Revenue Agency.
“If I buy 10,000 miles directly from Aeroplan, I pay 3 cents apiece or $300,” he says. “If I use Plastiq, I’m paying two per cent or $200.
“I get convenience, points and extra time to pay off the debt. I’m extending my deadline by 21 days by using the float that credit cards offer.”
That’s a great strategy if you have enough cash to pay in full when your credit card bill arrives in May. But if you have to make partial payments, you’re better off avoiding credit cards.
The annual interest rate for standard credit cards goes from 18 to 21 per cent. CIBC Aerogold’s rate is 19.99 per cent for purchases and 21.99 per cent for cash advances, balance transfers and convenience cheques.
You’ll save money using a line of credit to pay your tax bill gradually, especially if you have secured line with a rate of under 10 per cent.
Even better, the Canada Revenue Agency charges only five per cent interest if you need time to pay your taxes owing. It’s one of the best deals around.
Still, Plastiq offers convenience for those who want to use their preferred credit cards to pay their tax bills. You don’t have to register online or carry another card in your wallet.
“In my case, I’m paying $10,000 to the CRA and I’m billed $200 extra on the card I’m using. It’s two separate transactions,” says Ades.
Plastiq has raised $8.25 million from venture capital firms in two rounds of financing. Its goal is to bring credit cards into markets where they haven’t been accepted before.
As well as education and income taxes — H& R Block Canada announced a marketing deal with Plastiq last month — the company plans to get into apartment rentals by working with large property management firms.
“We tried to develop a product that was very simple. All payments happen securely at Plastiq.com,” says Buchanan.
As for Ades, he likes working with a team of young people the same age as his children.
“Half of them show up in hoodies and half in suits. It’s a real mix,” he says.
Ellen Roseman writes about personal finance and consumer issues. You can reach her at ***@thestar.ca or www.ellenroseman.com
-----------------------------------------------------------
Miss a Tax Tale Miss a lot!
Visit the CRA SOTW Library at http://canada.revenue.agency.angelfire.com
------------------------------------------------------------
Alan Baggett – Tax Collector’s Bible - http://taxcollectorsbible.com/