Paying your income tax by monthly instalment with CardUp and ipaymy

It’s income tax season in Singapore again, and that’s got most of our readers investigating the cheapest opportunity to accrue miles with their annual ‘contribution to nation-building’. Luckily over the last few years, this large expense has become an increasingly easy way to significantly top up your miles stash for a reasonable fee.

While most of our readers choose to settle their income tax payment as a lump sum to maximise the value of promotional offers from the card payment providers and banks, many have been limited by their preference to instead pay this expense by interest-free GIRO arrangement over the year.

That’s meant sticking to the ‘Return Payment Methods’, like those offered by HSBC and OCBC, where the payment facility transfers the relevant amount to your bank account, while charging your credit card for the same amount plus the processing fee.

You then pay IRAS directly, giving you the freedom to pay your tax bill by monthly GIRO if that’s what you prefer, while still accumulating miles for the initial transaction.

What about CardUp and ipaymy?

Both the major card payment providers in Singapore, CardUp and ipaymy, have traditionally been thought of as ‘Direct to IRAS’ payment methods, since they will be making the income tax payment directly on your behalf.

That’s not quite true though. For some time, ipaymy has been supporting monthly payments to IRAS, provided you have a GIRO arrangement set up and you schedule your recurring payments at least five working days prior to the IRAS GIRO debit date each month.

That’s because if you settle the monthly deduction before it falls due, IRAS then won’t take the payment from your account that month.

CardUp now supports monthly IRAS payments

Good news is that CardUp is now also offering the monthly recurring payment option for your IRAS deductions, on the same proviso that you have a GIRO arrangement set up with IRAS and you schedule each monthly payment through CardUp at least five working days before the due date.

You’ll have to keep the GIRO arrangement with IRAS in place, which might seem a little counterintuitive, but don’t worry – provided your account credits via CardUp make it into your IRAS account first, the GIRO will not be deducted.

You can also combine this new option with CardUp’s 1.75% income tax offer (CUTAX2021) for a one-time tax payment, by applying that code to a one-off payment for the first month’s tax obligation, then setting up a recurring monthly payment for subsequent payments at a 2.25% fee (GET225).

Let’s look at an example using the UOB PRVI Miles card, which earns 1.4 mpd on CardUp transactions, to settle an income tax bill of S$12,000 over 12 monthly instalments, payable to IRAS by GIRO arrangement from June 2021 to May 2022.

In this example you are applying the one-time CUTAX2021 promo code to the first payment for a 1.75% fee, then set up a recurring monthly payment to IRAS using the GET225 promo code for a 2.25% fee for the remaining 11 months.

No funds will be deducted from your bank account, instead you’ll pay CardUp for each instalment including the respective fee using your chosen credit card.

Note that CardUp does have a 1.8% fee recurring payment promotion for the first six payments in a series, but unfortunately it is not applicable to income tax payments.

Full details of CardUp’s new monthly income tax payment option are available here.

How does ipaymy compare?

You can replicate the same payments using ipaymy, however in this example the facility’s 1.89% recurring payment promotion is applicable to income tax payments. This rate automatically kicks in when you set up a recurring payment for 3 months or longer, using a Singapore-issued Visa or Mastercard.

Let’s take a look at how that would work using the same S$12,000 income tax bill, settled using the same 1.4 mpd UOB PRVI Miles card.

In this case there’s a saving due to ipaymy’s recurring payment promotion, meaning you are buying miles at a more competitive 1.32 cents each over the year in the above example, 15% cheaper than using CardUp.

Even better: Use both providers

Paying your income tax by GIRO? There is absolutely nothing to stop you using CardUp to pay your first income tax monthly instalment at a 1.75% fee, then switching to ipaymy for the promotional 1.75% rate for your second month, followed by the ipaymy recurring 1.89% fee for the remaining payments.

This would be the most optimal way to minimise the fee and drive down your cost per mile when making income tax payments by GIRO through these two providers.

If you can also throw in the MAINLY178 code as a new ipaymy customer for your first payment through that platform before then using the TAX2021 promo – even better!

Summary

It’s nice to see more options for income tax payment from CardUp, with this new way to keep paying by GIRO while still earning miles in the process.

Unfortunately the downside is that CardUp’s promotional recurring payment fee doesn’t cover the income tax option, so after your first payment you are back to the more widely available 2.25% fee, which involves buying miles at higher rates.

For those wanting to take advantage of GIRO payment this year, there’s also a neat way to use both CardUp and ipaymy’s 1.75% promotional fee to cover two months’ worth of payments at this competitive rate, before switching to a recurring payment method if you wish.

(Cover Photo: Shutterstock)