Credit card payment fee deductibility guidelines

Claiming the card payment fee as a tax deduction

If you pay a liability owing to the Commissioner by credit or charge card, you may be able to claim the card payment fee as a tax deduction in some circumstances.

Whether you are able to claim a card payment fee (CPF) as a tax deduction depends on the following:

• the type of card used
• the type of liability being paid
• if the amount to be paid is being:
• borrowed from the card provider - for example, using a credit account, or
• paid out of your own funds - for example, using a debit card.

For more information, refer to the relevant sections of the Income Tax Assessment Act 1997: Section 8-1 - General deductions Section 25-5 - Tax related expenses Section 25-25- Borrowing expenses.

When can you claim a tax deduction

The following information outlines when you:

• can and cannot claim a deduction for a CPF you incur when making a payment, and
• may only claim part of the CPF.

You should assess each payment you make using a credit card to work out if you can claim a deduction for all or part of the CPF.

Where a payment is for a number of liabilities, you can only claim the CPF if you would be eligible to claim a deduction for each individual liability. Where the CPF relates to liabilities that are both deductible and non-deductible, the CPF would have to be apportioned on a fair and reasonable basis.

The CPF is deductible to the extent that:

• you incurred it as a result of paying an income tax liability and you did not borrow money from your card provider to make the payment
• you incurred it as a result of paying a goods and services tax, fringe benefits tax, luxury car tax or wine equalisation tax liability, and that liability arose in the course of gaining or producing your assessable income, or in the course of carrying on your business for the purposes of gaining or producing assessable income
• you incurred it as a result of making PAYG withholding payments where you can claim a deduction for the wages and salaries that gave rise to the withholding obligation
• you incurred it as a result of repaying your student assistance loans and then only to the extent that the expenses you paid using the student assistance loans were themselves deductible
• you incurred it as a result of repaying your employee's student assistance loan, the repayment is a fringe benefit, and the employee's wages are also deductible.

Student assistance loans include:

• HELP or FEE-HELP repayments
• certain social security liabilities owing to the Commonwealth
• certain student assistance liabilities owing to the Commonwealth.

For more information on: social security liabilities, refer to Part 2B.3 of the Social Security Act (Cth) 1991 student assistance liabilities, refer to Part 4A of the Student Assistance Act (Cth) 1973.

The CPF is not deductible to the extent that:

• you incur it in paying other liabilities, such as the Medicare levy and Medicare levy surcharge
• you incur it in relation to the payment of penalties such as a failure to lodge penalty.

What to read/do next

If you feel that our advice and guidance does not fully cover your circumstances, or you are unsure how it applies to you, seek professional advice or request a private binding ruling.

For more information, refer to How to apply for a private binding ruling (NAT 6053).