How To Pay Your Income Taxes With A Credit Card  

How To Pay Your Income Taxes With A Credit Card  

Written by Priyanka Correia
Fact-checked by Caitlin Wood
Last Updated October 4, 2022

The Canada Revenue Agency (CRA) allows taxpayers to pay their taxes online, in person or by mail. Depending on the method you choose to pay your taxes, you’ll have a variety of payment options to make your payment. This may include a direct payment from a bank account, a pre-authorized withdrawal, or an e-transfer. 

Did you know that paying your income taxes with a credit card is also an option?

Can You Pay Your Taxes With A Credit Card?

If you’d like to pay your taxes using a credit card, you’ll need to use a third-party service provider like Plastiq or PaySimply. These services allow you to make a payment to the CRA, however, they charge you a fee for their service. Processing times for each service will vary, as will the types of credit cards accepted. 

Even with a third-party payment cost, paying with a credit card may still be a good option in some cases.

How To Pay Your Taxes With A Credit Card?

You can use a credit card to pay your taxes through a third-party service. Depending on the third-party service provider you choose to pay your taxes with, the process, fees and credit cards accepted will vary. Currently, you can only use two third-party services to pay your taxes via credit card: 

  • PaySimply
  • Plastiq

How To Pay Your Taxes With A Credit Card Through PaySimply

PaySimply is a popular and convenient way to pay the CRA and other bills online using a credit card. To make a payment to the CRA, simply follow these steps:

  • Step 1. Provide details on the type of tax you’d like to pay. You can choose between individual and business taxes. 
  • Step 2. Once you’ve provided information on the type of payment you’d like to make to the CRA, you’ll need to provide some personal information. This includes your full name, social insurance number, email address and total payment amount. 
  • Step 3. The next step involves providing your payment information. PaySimply offers a variety of payment options as follows:
    • Credit Card (Amex, Visa and Mastercard) – Payment should appear in your CRA My account in 8 business days. 
    • Paypal – Payment should appear in your CRA My account in 8 business days. 
    • Canada Post – Payment should appear in your CRA My account in 5 business days. 
    • Interac e-Transfer – Payment should appear in your CRA My account in 6 business days. 
  • Step 4. Once you’ve chosen your payment method and inputted all the information, you’ll be asked to review your entire payment. If everything is accurate, you can submit your payment. 
  • Step 5. Once you submit your payment, you’ll receive a confirmation. 

PaySimply Fees

Fee
Credit card (Mastercard, Visa, American Express, UnionPay)2.5%
Canada Post offices (cash or debit)$3.95 – $7.95 
Interac e-Transfer1.0%
PayPal2.5%

Benefits Of Paying Your Taxes Through PaySimply

  • PaySimply Mobile App – Track your payments and schedule reminders. Manage and pay all of your individual and business taxes on the go in just a few simple clicks.
  • Variety Of Payment Options – PaySimply offers a wide variety of payment options to choose from including credit cards, PayPal, Interact e-Transfer and in-person through Canada Post. 
  • Earn Credit Cards Points – When you use your credit card to pay your tax bill you’ll earn points (if you have a rewards or cash back credit card). Just keep in mind that the number of points you earn likely won’t offset the fee you’ll pay. 

How To Pay Your Taxes With A Credit Card Through Plastiq

One of the biggest third-party payment services is Plastiq. You can use any credit card to pay your bills, including your income taxes. To pay your taxes using Plastiq, simply follow these steps: 

  • Step 1. You can pay your taxes through Plastiq as a guest or by creating an account with them. To create an account, you’ll need to provide your full name, number and email address.
  • Step 2.  Next, you’ll need to provide some personal and tax information such as your full name, social insurance number, end of the tax year and the type of tax in question. These are some of the types of taxes you can pay using Plastiq:
    • Personal Taxes – T1
    • Corporate Taxes – T2
    • Payroll Deduction
    • Excise Tax
    • Excise Duty
    • Fuel Charge
    • Air Traveller’s Security Charge
    • Nova Scotia Workman’s Compensation Board
    • GST/HST
    • Withholding Tax for Non-residents
    • Benefits and Credits
  • Step 3.  Then just simply follow the instructions to pay your taxes. This includes entering your payment information. You can pay your CRA tax payments with Plastiq using one of three credit card types:
    • Visa
    • Mastercard
    • Amex

Fee

Plastiq usually charges 2.85 percent for credit card payments, but this can vary depending on the country the card is issued. If you don’t have a Canadian bank account, you can still use Plastiq to pay your taxes.

Benefits Of Plastiq 

  • Various Payment Options – Pay your taxes using your preferred method of payment. 
  • Earn Credit Card Rewards – When you use your credit card to pay your taxes, you’ll earn points or cash back on every dollar spent. 

Should You Pay Your Taxes By Credit Card?

The Canada Revenue Agency allows Canadians to pay their taxes using their credit cards through a third-party service. While there are certainly pros to using your credit card through these third-party services to pay off your tax debt, there are also cons you should consider. 

Pros Of You Pay Your Taxes By Credit Card

  • Points: If your credit card has a great rewards program, paying a significant tax bill using it will help you earn those points.
  • Grace Period: The number of days between receiving your monthly statement and making your payment is known as the grace period on your credit card. The majority of credit cards offer a 21-day interest-free grace period. This provides you some interest-free time to save enough money to pay off your credit card before the grace period ends, as well as to pay off your tax bill before late penalties are applied.
  • Convenience: Credit card payments allow you to pay your tax bill with your preferred credit card from any location in the world.

Cons Of You Pay Your Taxes By Credit Card

  • Cost: When you use third-party services like Pastiq or PaySimply, you’ll be charged a fee for their services. These fees are percentage based, so the higher your payment, the more fees you’ll pay. As a result, check to make sure the cost of using a credit card is justified in terms of rewards. For example, if you owed $2000 in taxes and you’re being charged a 2% fee, that would cost you $40 in fees. 
  • Interest: If you can’t entirely pay off your credit card within the grace period, you might reconsider paying your tax obligation with a credit card. The interest rate on most credit cards will be around 19 percent. When the grace period expires, you’ll be stuck with a potentially large sum on a credit card, with a rate that’s likely higher than the CRA would have levied.

Note: If you file your taxes on time but are unable to pay your entire tax bill on time, the balance owed to the government will begin to accrue interest (a late-filing penalty of 5% on any unpaid arrears) on the amount owed.

Other Ways To Pay Your Taxes In Canada 2022

You can pay your taxes in a variety of ways other than with a credit card, including:

How To Pay Your Taxes Online 

  • CRA My Payment – My Payment is an online service that allows you to make immediate payments to the Canada Revenue Agency (CRA) using your bank access card. The CRA typically processes payments in 1 to 3 working days.
  • Pre-Authorized Debit (PAD) – Individuals and corporations can pay their taxes using pre-authorized debit (PAD), a secure online self-service payment alternative. You choose the payment amount and permit the Canada Revenue Agency (CRA) to deduct it from your Canadian chequing account on the date(s) you specify
  • Wire TransferNon-residents without a Canadian bank account can pay the Canada Revenue Agency (CRA) by wire transfer or with an internationally issued credit card through a third-party service provider. 

How To Pay Your Taxes In Person

  • Financial Institution – The payment is considered complete as of the date stamped. At your Canadian bank, financial institution, or credit union, pay using a printed individual remittance voucher.
  • Canada Post Locations (debit or cash) – Pay with a QR code at a Canada Post store to ensure your payment is applied to the correct CRA account (service fees apply)Time to process: 

How To Pay Your Taxes By Mail

You can pay your taxes by mail by sending your remittance voucher together with your Canadian cheque or money order payment. Once the CRA receives the payment, it is considered paid. 

FAQs

Is it a good idea to pay your taxes with a credit card?

It is all about balancing the benefits of points, the grace period, and the convenience.  If your credit card has a great rewards program then you may be able to earn a significant number of points. Your credit card’s grace period can provide you some interest-free time to save enough money to pay off your credit card before the grace period ends, as well as to pay off your tax bill before late penalties are applied. Finally, the convenience enables you to pay your tax bill with your preferred credit card from any location in the world. 

How to pay your taxes with a credit card?

Credit cards are not accepted by My Payment. You can pay with a credit card, debit card, PayPal, or Interac e-Transfer through a third-party service provider. The third-party service provider will send your payment and remittance data to the Canada Revenue Agency (CRA) online on your behalf. For their services, third-party service providers charge a fee.  The two main third-party providers are PaySimply and Plastiq.
 

Does the CRA accept credit cards?

You can use a third-party service provider like (PaySimply or Plastiq) that offers payment by credit card, debit card, PayPal, or Interac e-Transfer. The third-party service provider will send your individual or business payment and remittance details online to the Canada Revenue Agency (CRA) for you. 

What is the downside to paying your taxes with a credit card?

The consistent downside of paying a tax liability with a credit card is the processing fee while using a third party to finalize the process, as well as any interest your credit card balance accrues if you do not pay it off right away.

How do I pay my taxes to the CRA?

There are numerous ways you can choose to pay your taxes to the CRA. You can pay your taxes online, in-person or by mail. Depending on the method you choose, the payment options will vary. 

Conclusion

Using a third-party service like Plastiq or PaySimply to pay your tax bill is a convenient option and if done correctly and responsibly, it can even earn rewards points from your credit cards. Just be sure the advantages outweigh the disadvantages, and that you can pay off the borrowed money before the grace period ends to avoid paying interest.

Priyanka Correia is a Marketing Coordinator and personal finance expert at Loans Canada. Priyanka completed her Bachelor's degree in Marketing at Concordia University and has published work that has been mentioned in various news media. She is passionate about money management and educating Canadian consumers about how to take control of their financial lives.

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