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A friend recently asked me what’s the best payment method for income tax payment as the tax statements have just come in. So i was looking back at my archives and found the previous article published in May last year. Just a quick update to the previous article as there have been some changes.

A look at the current best options in my opinion:

1. GIRO

With 12 interest free instalments, one can keep the extra money in one’s account for additional interest instead of paying off the money at one go. Some people will choose to be debt free and pay off the money at one shot but my advice is – let your money grow instead, why put it in someone else’s account when it could be in yours? Don’t give away more money to the government than you should!

Now OCBC 360 has reduced their interest rate but it’s still 2.2% with monthly salary + 3 bill payments each month + $500 credit card spend, so why not grow your interest?

2. Credit Card instalments

a. HSBC

An administration fee of 0.7% on each tax amount will be charged to the HSBC Classic / Gold / Platinum / Revolution / Advance credit card. An administration fee of 0.5% on each tax amount will be charged to the HSBC Premier MasterCard credit card. An administration fee of 1.5% on each tax amount will be charged to the HSBC Visa Infinite credit card. The administration fee will be charged upon the successful deduction of the tax amount each time and will appear as a separate charge in your credit card statement.

The below diagram illustrates the payment process:

Note that $1 charged to your HSBC credit card will earn 1 point, hence for a tax payment of $3000, you will need to pay $3000 * 0.7% for most HSBC credit cards (or 0.5% for HSBC Premier)=$21. That translates t0 3000 HSBC points, which can be used to redeem 3*Caltex Car Wash with Sonex (worth $8*3=$24). The rest of the vouchers will require more points for redemption e.g. $10 shell voucher – 2500 points.

b. ANZ

The administration fee is the now 1% (0.7% previously) for most cards and 0.5%  for Signature Priority customers. Every S$5 charged to your ANZ Credit Card (Platinum/Switch) earns you 1 Rewards Point. Get 0.5 Travel$ (0.5 miles) with every $1 charged. Hence, $3000 worth of income tax payments will yield 600 Rewards Point or 1500 miles with ANZ Travel Visa Signature (at a cost of $30). For ANZ, according to their redemption guide here, you need 500 points to redeem a $10 Caltex voucher. I would strongly recommend to accrue the miles instead if you love to accrue miles to redeem for your next flight out.

There used to be a rebate on administrative fee for ANZ for regular spenders, but this benefit is no longer available.

Summary

There are pros and cons to either payment through GIRO or credit card. This year, the credit card option is not as fantastic as the last since ANZ has withdrawn the rebate on administrative fee and increased their administration charge to 1%. Comparing ANZ and HSBC, I still think mileage is a better option than reward points for vouchers. However, the difference between credit card payment and GIRO is really minimal so whichever is more convenient for you. Any comments or feedback kindly leave in the comment box below!

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