Will that be cash or Plastiq?

National Post


If you owe taxes this April 30, you now have a new option - charge it. In late March, Plastiq Inc., an online payment provider based in Boston, announced Canadians can now charge any personal income tax amounts owing to the Canada Revenue Agency to the credit card of their choice, presumably in a desire to gain reward points offered by using a credit card instead of paying by cheque or through online banking.

Plastiq attempts to fill a gap in the payment world where credit cards are generally not accepted by merchants for large-dollar purchases due to the fees they charge which are based on a percentage of the transaction. For example, if you want to buy a car, boat or even a home and charge it to your credit card. Plastiq works with merchants throughout North America in the post-secondary education sector, boating and automobile industries as well as real estate markets to facilitate those transactions.

For example, a search of Plastiq's website shows you can pay your child's tuition at some of Canada's private schools that otherwise don't accept credit cards. The University of Alberta in Edmonton and Calgary's Mount Royal University both accept payment via Plastiq. Several car dealerships are also on the list.

The price of paying online is 2% per transaction, payable by the purchaser, which is a reversal of the normal credit card model with the merchant paying a percentage of the sale as a fee. According to Plastiq, this fee "allows Canadians to make large payments via their American Express, MasterCard, or Visa card to merchants who would previously accept only cash or debit."

To pay your taxes by credit card, visit www.plastiq.com [http://www.plastiq.com], and click on "Pay Taxes Now," You fill in your name, social insurance number and what type of tax payment you wish to make to the CRA: T1 payment on filing, 2013 tax instalment or T1 Balance Owing/Arrears (from a prior year). Enter your email address to receive a receipt and then your credit card info.

So, is it worth it? For starters, you wouldn't want to put taxes owing on your credit card if you don't have the money in your bank account to pay off your credit card bill when your statement arrives. In that case, you'd be better off effectively borrowing the money from the CRA, as their rate for balances owing is a mere 5%, which pales compared to what many credit cards charge. Your best bet may be a secured line of credit to finance taxes owing.

In the end, it likely comes down to how much you value your points. If you owe $5,000 in taxes and it costs you 2% or $100 to pay by credit card, maybe that's worth it if it allows you to earn 5,000 Aeroplan miles for which Aeroplan would otherwise charge you 3¢/mile or $150.