The Australian Taxation Office (ATO) appear to no longer accept payments from prepaid Visa and Mastercard gift cards, potentially spelling the end of a popular hack that allowed Australians to save money and earn points when paying taxes.
What’s changed
As part of a recent upgrade to their card payment system, the ATO now require you to enter a billing address and phone number or email that can be matched against those held by your financial institution.
If necessary, your payment may also be verified by a one-time-pin or some other form of authorisation (e.g. approving the transaction in your bank’s mobile app).
The ATO say that these new changes, which affect both the MyGov and Government EasyPay websites, were implemented to help stop fraudulent card use:
This is a security measure that ensures safer payment transactions. It helps to verify that you are the authorised card holder, and stolen or compromised card details are not being used.
The details you enter should match what is on record with your card issuer, and may be different to the details held by the ATO.
If you’re paying with your own credit or debit card this should not be an issue. With a prepaid Visa or Mastercard gift card, however, there is usually nothing tying your identity to the card issuer so you’re unable to provide the required information or verify your activity.
Why people use gift cards to pay tax
An increasingly popular hack in recent years has been to buy selected prepaid Visa or Mastercard gift cards during a promotion and then use them to pay the ATO.
This is sometimes known as the “OzBargain way” of paying tax, owing to the fact that the practice was popularised by users of the deal sharing website.
If it was a discount on the gift cards then you would essentially receive a discount your tax. If it was a bonus points offer then you could earn thousands of frequent flyer or shopping rewards points.
For example, at the time of writing there’s a $13 discount on $250 Mastercard gift cards at Coles and in recent months we’ve also seen offers of 2,000 Flybuys points on the $100 cards.
Another benefit of these offers is that they allowed people to circumvent restrictions and surcharges on paying the ATO with a points-earning Visa, Mastercard or American Express credit card.
Instead of paying the ATO directly, you could buy the gift cards with a credit card and then use them to pay the ATO without incurring a surcharge (the ATO treat these gift cards as domestic debit cards which no longer have a surcharge as of 1 Jan 2025).
Not all prepaid gift cards sold in Australia permit payments to the ATO but those produced by industry giant InComm Payments have a long history of allowing it.
InComm Payments’ Vanilla Visa and Vanilla/Coles Mastercard products are stocked at both Coles and Woolworths so they frequently appear in the supermarkets’ weekly gift card promotions.
Possible workaround
If you’re sitting on a pile of Coles Mastercard or Vanilla Visa gift cards that you were hoping to pay the ATO with, there might still be some hope.
Some OzBargain users have already reported that they were able to use their gift cards to pay the ATO over the phone, although others have indicated that it didn’t work for them.
Even if this workaround is still possible, it’s unlikely to last for long.
Featured image credit: GCDB, ATO, Visa, Mastercard