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Does the arrival of spring mean tax payments for you? Turn this obligation into an opportunity. Payment platforms such as Plastiq, Chexy, and PaySimply allow you to pay your taxes by credit card in exchange for reasonable service fees.
These services are entirely legitimate and officially recognized by the Canada Revenue Agency. You can use these platforms to make all your tax payments, including federal and provincial taxes, instalment payments, and business taxes.
By using a carefully selected credit card, you can earn attractive cash back or unlock a welcome bonus to earn a significant number of rewards points.
Here are our best strategies to maximize your rewards when paying your taxes by credit card this year.
We recommend using these platforms only in two scenarios:
It is important to know that a payment with Plastiq, Chexy, or PaySimply will be categorized as an other expense by your credit card, which is generally the category that earns the least cash back or rewards.
Therefore, unless your credit card offers you more than 2.49% (PaySimply and Plastiq fees) or 1.75% (Chexy fees) cash back, you will lose money using this service to pay your taxes by credit card.
Let’s now look at the two scenarios in which using PaySimply or Plastiq can be a worthwhile option for you.
To maximize cash back on your tax payments, you will need to pay with a card that:
Here are the credit cards that meet these criteria, provided the spending is eligible toward the welcome bonus requirements:
To see what kind of return you can get on $4,500 in tax payments, let’s use an example with the CIBC Dividend® Visa Infinite* Card and the Scotia Momentum Visa Infinite Card with Chexy.
By taking advantage of the welcome offers on these two cards, I can:
I would therefore receive a total of $450 in cash back on my tax payments.
Since I will have paid a 1.75% fee (or $78.75) on these two payments through PaySimply, I will get a net return of $371.25 by using these welcome offers to pay $4,500 in taxes.
Thus, in total, I get a net cash back of 8.25% on an amount up to $4,500 in tax payments with Chexy.
In addition, there will be no annual fees on either of these two cards for the first year!
Here are the details for each of these cards.
The CIBC Dividend® Visa Infinite* Card is one of the best Visa credit cards with cash back in Canada.
Right now, with this welcome offer, get a 10% welcome bonus in the form of up to $250 cash back (period covered by your first 4 statements) and a rebate on your first year’s annual fees†!
Plus, receive $50 cash back when you set up a pre-authorized payment within the first 4 months.
With this CIBC cash back credit card, you earn:
For example, if you spend $1,000 per month on groceries and/or gas and/or electric vehicle charging, you’ll earn $40 cash back per month or $480 cash back per year with this card for this category of purchases!
And that’s not counting the other purchases you’ll make with this card and the advantages it offers (particularly in terms of insurance).
And this CIBC Cash Back Credit Card offers many insurance coverages:
The Scotia Momentum® VISA Infinite* card is recognized year after year as one of the best cash-back credit cards in Canada.
Currently, there is no annual fee in the first year, including on additional cards. And you can earn 10% cash back on all purchases for the first three months (up to $2,000 in total purchases).
With the Scotia Momentum® VISA Infinite* card, you get:
For example, if you spend $1,000 per month on groceries and/or recurring payments, you’ll earn $40 cash back per month, or $480 cash back per year with this card for this category of purchases! And that’s not counting the other purchases you’ll make with this card and the advantages it offers (particularly in terms of insurance).
If you rent, for example, you could use the Scotia Momentum® Visa Infinite* Card on the Chexy website to pay your rent and get 4% cash back!
The Scotia Momentum® VISA Infinite* card is an excellent Visa credit card for cash back.
And its insurance benefits are excellent!
The other situation in which using Plastiq, Chexy, or PaySimply can be worthwhile is to reach a spending threshold required to unlock a credit card welcome offer.
This can be particularly useful for premium credit cards which often require a significant spending level in the first few months to earn bonus points.
For example, you need to spend $10,000 in three months to get the American Express Platinum Card® and $7,500 in three months for the American Express® Business Gold Rewards Card.
Individuals can also apply for American Express business cards. Here’s how:
Here are other examples of credit cards that require a certain level of spending in the first few months to unlock highly valuable welcome bonuses:
Note that these credit cards include many other benefits in terms of insurance, travel credits, free checked baggage, and much more. Take the time to review them to determine which one will be the most rewarding based on your spending habits and travel goals.
If you are interested in one of these premium cards but find it out of reach because of the spending requirement needed to unlock the welcome offer, your tax payments could help you reach that threshold.
You can also combine this approach with a gift card strategy to help you reach the required spending threshold.
Before moving forward with tax payments, run the numbers to determine whether applying for new credit cards makes sense, and which card is best suited based on the amount you need to pay.
Tax season is never the most cheerful when you owe money. At the very least, by using these strategies with PaySimply, Chexy, and Plastiq, you can earn cash back or rewards points that can help cover part of your next trips.
Ready to try one of these options? Use our tutorials:
Yes, it is perfectly legal. The Canada Revenue Agency (CRA) and Revenu Quebec do not directly allow credit card payments, but they officially recognize third-party providers like PaySimply and Plastiq, who offer this service for a fee.
PaySimply and Plastiq charge a 2.49% fee for tax payments made with Visa, Mastercard, or American Express credit cards.
The best card depends on your goals. For cash back, the CIBC Dividend Visa Infinite Card offers up to 4 percent on bill payment services, which can make paying taxes worthwhile despite the fees. If your focus is travel points or a welcome bonus, Aeroplan cards or American Express cards with generous welcome offers may be more appealing. The key is to calculate the value of the rewards earned relative to the fees paid.
There is nothing special to indicate on your tax return. Plastiq and PaySimply send your payment directly to the Canada Revenue Agency or Revenu Québec with all your identifying information. From a tax filing perspective, it is the same as paying the government directly. Simply keep the transaction confirmation for your records.
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