2020 Edition: How to earn miles when paying Singapore income tax

Amidst all the chaos and uncertainty of Covid-19, there’s something strangely comforting in knowing that no matter what happens, your taxes will still need to be paid.

Tax season is here again, and it’s time to look at this year’s options for earning miles on what could very well be a substantial outlay.

Individuals with income tax obligations will need to file their taxes between 1 March and 31 May 2020. They’ll subsequently receive their tax bill (NOA) between the end of April and September 2020. IRAS sends NOAs in batches, so don’t feel left out if everyone else gets theirs before you do.

How do I pay my income tax bill with a credit card?

IRAS doesn’t accept credit card payments. In their own words:

Credit card payments are not offered by IRAS directly because of the high transaction costs charged by the credit card service providers. This is to keep the cost of collection low to preserve public funds.

Fair enough. However, this doesn’t mean you can’t use your credit card to pay taxes. Thanks to demand, tax payment facilities have been created, allowing cardholders to earn rewards in exchange for a small fee.

There are two types of tax payment facilities:

Indirect Payment Facilities	Direct Payment Facilities

Both work the same in the sense that you submit your NOA*, and your credit card is charged for the amount due plus an admin fee.

Where they differ is that an indirect payment facility deposits the amount due into your designated bank account, in cash. You’re still responsible for paying IRAS. 

With a direct payment facility, the facility provider pays IRAS on your behalf.

Whether it’s better to use an indirect or direct facility all comes down to the cost per mile- the admin fee, divided by the miles you receive on your card.

Regardless of which one you pick, some common rules apply:

• You can’t pay someone else’s tax bill, only your own
• You can’t pay more than the amount shown on your NOA

In this post, we’ll look at which option gives the lowest cost per mile.

What are the fees involved?

As mentioned, it’s not free to use your credit card to pay income tax. There’s an admin fee involved, which varies depending on provider.

List of Payment Facilities
Bank	Applicable Cards	Admin Fee
Link	Premier Mastercard, Visa Platinum, Revolution, Advance, Visa Infinite	0.5-1.5%
Link	All BOC cards	1% (No rewards points)
Link	Visa Infinite	1.6%
Link	All Cards	1.75% for Milelion readers (see below)
Link	VOYAGE	1.9%
Link 1, Link 2*	PRVI Miles, Visa Infinite Metal, Reserve	1.9-2%
Link	All Citibank cards	2%
Link	All SCB cards	2%
Link	All DBS cards	3%
Key	Indirect	Direct
*UOB payment facilities are not specifically designed for tax, but can be used for this purpose. However, it’s cheaper to use CardUp (see below)

It may be tempting to compare them on the basis of admin fees, but that’s only half the story. You need to also consider the earn rate.

For example, the HSBC Premier Mastercard has an admin fee of 0.5% and an earn rate of 0.4 mpd, so your cost per mile is 1.25 cents. On the other hand, the SCB Visa Infinite has a higher admin fee of 1.6%, but also a much higher earn rate of up to 1.4 mpd, resulting in a lower cost per mile of 1.14 cents. 

In the same way, the UOB PRVI Pay facility has a 2% fee, but the PRVI Miles card only earns 1 mpd through it, resulting in a cost of 2 cents per mile. In contrast, CardUp has a higher fee of 2.25%, but the PRVI Miles card earns 1.4 mpd here, resulting in a lower cost of 1.57 cents per mile.

What’s the cheapest option for paying tax with a credit card?

If that’s too much math for you, here’s the summary table. In the interest of space, I’ve only listed the cheapest option possible for each card.

Summary of Tax Payment Options
Card	Pay Via	Fee	MPD	CPM
DBS Insignia	CardUp	1.75%	1.6	1.07
UOB Reserve	CardUp	1.75%	1.6	1.07
OCBC VOYAGE (Premier & PB)	CardUp	1.75%	1.6	1.07
Citi ULTIMA	CardUp	1.75%	1.6	1.07
SCB Visa Infinite	Bank	1.6%	1.41/ 1.0	1.14/ 1.6
AMEX Centurion	CardUp	2.4%	1.952	1.2
UOB PRVI Miles Visa	CardUp	1.75%	1.4	1.23
UOB PRVI Miles Mastercard	CardUp	1.75%	1.4	1.23
UOB Visa Infinite Metal	CardUp	1.75%	1.4	1.23
HSBC Premier Mastercard	Bank	0.5%	0.4	1.25
HSBC Visa Infinite	Bank	1.5%	1.253/ 1.0	1.28/ 1.61
OCBC VOYAGE	CardUp	1.75%	1.3	1.32
Citi Prestige	Cardup	1.75%	1.3	1.32
Citi PremierMiles	PayAll	2%	1.5	1.33
SCB X Card	CardUp	1.75%	1.2	1.43
DBS Altitude Visa	CardUp	1.75%	1.2	1.43
OCBC 90N	CardUp	1.75%	1.2	1.43
KrisFlyer UOB	CardUp	1.75%	1.2	1.43
AMEX Platinum Charge	CardUp	2.4%	1.562	1.50
BOC Elite Miles	CardUp	1.75%	1.0	1.72
HSBC Revolution	Bank	0.7%	0.4	1.75
AMEX KrisFlyer Ascend	CardUp	2.4%	1.2	1.95
1. 1.4 mpd if ≥S$2K spent in a statement period, 1.0 otherwise 2. Promotional rate until 20 July 2020 3. 1.25 if ≥S$50K spent in previous membership year; 1.0 otherwise

I’ve not shown any options that cost more than 2 cents per mile (so no Citi Rewards Visa for example), because that’s the limit which most people are willing to buy miles. Your ceiling will of course depend on how you value a mile.

A few points to note.

Apply for as many facilities as you want

If you hold more than one of the cards above, there’s nothing stopping you from applying for multiple tax payment facilities in order to buy more miles (otherwise known as churning).

For example, someone with a S$10,000 tax bill who holds both the SCB Visa Infinite and HSBC Visa Infinite could send the same NOA to both SCB and HSBC. Upon approval, he/she would buy up to 26,500 miles (14,000 from SCB, 12,500 from HSBC) for S$310 (S$160 from SCB, S$150 from HSBC).

Take particular care if you’re applying for two direct payment facilities, however, because there’s a chance you might end up overpaying your tax bill. “What’s wrong with funding the government’s working capital?” you may ask. Well, IRAS has to arrange for a refund, and it apparently scolds the sender in the process. Hence this line in the Citi PayAll T&Cs:

There’s no chance of this happening with indirect payment facilities, because the onus is on you to pay IRAS. What you do with the cash after it’s deposited into your account is your own business.

You can still use GIRO (in most cases)

IRAS allows taxpayers to split their payment into 12 interest-free installments via GIRO. This is great for maximizing your cashflow, and something I opt for each year.

There are no issues using GIRO if you opt for an indirect payment facility, as the bank simply credits the cash to your account and how you go about paying IRAS after that is up to you.

With direct payment facilities, it’s slightly trickier. You can’t use GIRO if you opt for CardUp, because they’ll charge your card for the full amount as shown on your NOA, and transfer that to IRAS. Your tax bill is paid off in one shot, and there’s no installments to speak of.

Citi PayAll and SC EasyBill, on the other hand, don’t request for your NOA. This means you could:

(1) Elect to pay your income tax via GIRO
(2) Make manual payments each month via PayAll/EasyBill, a few days before the scheduled deduction (6th of each month; where this is a weekend/public holiday, on the next working day)

As long as you don’t overpay your total tax bill (which triggers a refund from IRAS and a chiding from the bank), I don’t see any issues here. It’s OK to get the installment slightly wrong and pay more than what’s needed, so long as your total payment matches the total amount due.

Don’t forget about transfer partner variety

KrisFlyer
Star Alliance
	✅	✅	✅	✅	✅	✅	✅	✅	✅
	✅		✅					✅
	✅		✅
			✅
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								✅
Oneworld
	✅	✅	✅	✅	✅	✅			✅
	✅		✅
	✅		✅			✅
	✅		✅	✅
			✅					✅
SkyTeam
			✅					✅
	✅
Non-aligned
			✅					✅
	✅							✅
Hotels
								✅
	✅
			✅					✅
	✅

When evaluating two cards with similar cost per mile figures, it’s helpful to think of qualitative factors as well.

For example, both the DBS Altitude and KrisFlyer UOB credit card will have a 1.83 cents per mile cost through CardUp. However, points earned on the DBS Altitude can be transferred to KrisFlyer, Asia Miles, Qantas Frequent Flyer and AirAsia BIG, while the KrisFlyer UOB card can only earn KrisFlyer miles. All things equal, the DBS Altitude wins for its greater flexibility.

If you need a refresher on who partners with who, check out this article.

Conclusion

Tax season is a great opportunity to buy miles, as that NOA opens up a lot of possibilities. Be sure to educate yourself on the full range of options available!