If you’re facing a tax bill in Canada, paying on time is crucial to avoid additional penalties and interest. The Canada Revenue Agency (CRA) makes it relatively easy to settle your taxes in various ways, including using a credit card.
However, before swiping your card, it’s essential to understand how the process works, the benefits, and potential drawbacks.
Can You Pay Taxes with a Credit Card in Canada?
The CRA does not accept direct credit card payments. However, you can use third-party services such as PaySimply or Plastiq that facilitate credit card payments. These services act as intermediaries, forwarding your payment to the CRA for a fee.
If you decide to use a payment provider, be sure to:
- Pay a service fee for processing the transaction
- Provide necessary details, such as your Social Insurance Number (SIN), to ensure the payment reaches the correct tax account
- Use the CRA’s ‘My Account’ to confirm your payment status
Remember, you are responsible for ensuring your taxes are paid on time. It’s important to check your service provider’s timeframe for delivering payments, and aim to pay well in advance.
Benefits of Paying Taxes with a Credit Card
There are several advantages to using a credit card for tax payments, depending on your situation.
Convenience of Online Payments
- Pay from anywhere: Payment service providers allow you to pay taxes online, making the process more convenient, especially for those who may not be able to make payments in person.
- Earning rewards: Depending on your credit card, you could accumulate valuable rewards or cash-back on the payment amount.
- Extended timeframe: If there’s a gap between your credit card statement and payment due dates, you may have additional weeks before interest kicks in, offering a longer window to make your tax payment.
Drawbacks of Paying Taxes with a Credit Card
While there are benefits, there are also several disadvantages to consider before opting to pay with a credit card.
Costs and Potential High Interest
- Service fees: Third-party providers charge a fee, which could be higher than the rewards you earn from your credit card. For example, services like PaySimply charge a 2.5% fee, while Plastiq charges 2.9% plus a $1.49 delivery fee.
- High-interest rates: If you cannot pay your credit card bill in full by the due date, you might face interest rates ranging from 20% to 23%, significantly higher than the 10% interest CRA charges for overdue taxes. This can lead to higher costs than the original tax amount.
How to Pay Taxes with a Credit Card
Using PaySimply
PaySimply is a CRA-approved payment service that lets you use your Visa, Mastercard, or American Express to pay taxes. Here’s how it works:
- Choose the payment type (e.g., Individual (T1) 2023 tax return)
- Enter your information: Provide your email, SIN, full name, and payment amount
- Input your payment details and review your information
- Submit payment: You will receive a confirmation email once the payment is processed
Fees: PaySimply charges 2.5% of your payment amount.
Timeframe: Payments typically take three business days to reach the CRA.
Using Plastiq
Plastiq is a U.S.-based platform that allows you to pay taxes to the CRA using a credit card. To make a payment:
- Create an account and select Pay
- Add Canada Revenue Agency as a vendor and choose paper check delivery
- Enter your full name, SIN, tax type, and tax year
- Choose a delivery date and submit the payment
Fees: Plastiq charges 2.9% of your payment amount plus $1.49 for delivery.
Timeframe: Payments through Plastiq take between 7 to 10 business days to reach the CRA.
How Many Canadians Pay Taxes with a Credit Card?
While the CRA does not track credit card payments directly, services like PaySimply report increased usage over recent years. According to a 2023 press release, over 50,000 Canadians used PaySimply during the tax season.
Other Ways to Pay Taxes in Canada
If paying with a credit card isn’t your preferred option, there are several other ways to settle your tax bill, including online payments, in-person payments, and mail options.
Paying Taxes Online
You can make payments online by:
- Transferring funds from your bank account by adding the CRA as a payee
- Using My Account to set up pre-authorized debit withdrawals
- Paying by debit card using the CRA’s My Payment service
- Using third-party services like PaySimply for payments via debit card, PayPal, or Interac e-transfer
Paying Taxes In-Person
For in-person payments:
- Visit your bank with a remittance voucher to pay via debit card, cheque, or money order
- Go to Canada Post retail locations and use a QR code to pay by cash or debit card (a service fee will apply)
- Drop off a cheque and payment details at a CRA drop-box location
Paying Taxes by Mail
To pay by mail:
- Write a cheque to the Receiver General for Canada
- Include your remittance voucher or payment details
- Mail the payment to the CRA
What If You Can’t Afford to Pay?
If you owe more than you can afford, don’t resort to a high-interest credit card right away. The CRA offers flexible payment arrangements. You can set up a monthly installment plan through your CRA My Account or by contacting them directly.
While the CRA doesn’t directly accept credit card payments, third-party services like PaySimply and Plastiq provide convenient alternatives for paying your taxes. However, be sure to consider the associated fees and the possibility of high-interest charges if you can’t pay your balance on time.
Other methods such as online banking, in-person payments, and mailing a cheque remain viable options. Make sure to file your return by April 30, 2025, to avoid any late filing penalties.
FAQs
Can I pay my taxes directly with a credit card through the CRA?
No, the CRA does not accept direct credit card payments. You can use third-party services like PaySimply or Plastiq.
What are the fees for paying taxes with a credit card?
PaySimply charges 2.5%, and Plastiq charges 2.9% of the payment amount, plus an additional $1.49 delivery fee.
How long does it take for my payment to reach the CRA when using a credit card?
Payments via PaySimply take about three business days, while payments through Plastiq take between 7 to 10 business days.