From: AlanBaggett@volcanomail.com   
      
   Paying your income tax bill with a credit card : CRA SOTW   
      
   Plastiq lets you use a credit card to pay taxes owing to the Canada Revenue   
   Agency, but beware high interest rates.   
      
   By:Ellen RosemanOn Your Side, Published on Tue Apr 23 2013    
      
   David Ades recently did his 2012 income tax return. He found he owed $10,000   
   to the Canada Revenue Agency.   
      
   While most people write cheques to cover any taxes owing, Ades used his CIBC   
   Aerogold credit card and received Aeroplan points in return.   
      
   The Canada Revenue Agency is giving taxpayers a plastic option this year — or   
   to be more specific, a Plastiq option.   
      
   You can use your Visa, MasterCard or American Express credit card to pay your   
   tax bill if you go through an online payment company called Plastiq.   
      
   Ades is chief revenue officer for Boston-based Plastiq , a startup company   
   owned and run by two 23-year-old Harvard University graduates.   
      
   Before taking the job, he was senior vice-president of sales and marketing at   
   Moneris Solutions, one of North America’s largest payment processors.   
      
   “They’re youngsters,” he says about chief executive officer Eliot Buchanan and   
   chief operating officer Daniel Choi. “In aggregate, they’re still younger than   
   I am.”   
      
   Buchanan, born in Edmonton, got the idea of facilitating online payments when   
   he heard his father complaining about having to wire money to the United   
   States to pay for his tuition.   
      
   “I could see it was a consumer pain point,” he says. “Credit cards had been   
   around for a long time. Could they be a simpler way to resolve this hassle?”   
      
   The problem with credit cards is high transaction costs. Retailers absorb most   
   of these costs, which are a big irritant to the industry.   
      
   Most universities don’t take credit card payments in order to keep costs low.   
   Neither do most government departments.   
      
   Plastiq was designed to get around the problem. Customers foot the bill by   
   agreeing to a two per cent surcharge. Merchants pay nothing.   
      
   Let’s go back to David Ades, who wants to get 10,000 Aeroplan miles for his   
   payment to the Canada Revenue Agency.   
      
   “If I buy 10,000 miles directly from Aeroplan, I pay 3 cents apiece or $300,”   
   he says. “If I use Plastiq, I’m paying two per cent or $200.   
      
   “I get convenience, points and extra time to pay off the debt. I’m extending   
   my deadline by 21 days by using the float that credit cards offer.”   
      
   That’s a great strategy if you have enough cash to pay in full when your   
   credit card bill arrives in May. But if you have to make partial payments,   
   you’re better off avoiding credit cards.   
      
   The annual interest rate for standard credit cards goes from 18 to 21 per   
   cent. CIBC Aerogold’s rate is 19.99 per cent for purchases and 21.99 per cent   
   for cash advances, balance transfers and convenience cheques.   
      
   You’ll save money using a line of credit to pay your tax bill gradually,   
   especially if you have secured line with a rate of under 10 per cent.   
      
   Even better, the Canada Revenue Agency charges only five per cent interest if   
   you need time to pay your taxes owing. It’s one of the best deals around.   
      
   Still, Plastiq offers convenience for those who want to use their preferred   
   credit cards to pay their tax bills. You don’t have to register online or   
   carry another card in your wallet.   
   “In my case, I’m paying $10,000 to the CRA and I’m billed $200 extra on the   
   card I’m using. It’s two separate transactions,” says Ades.   
      
   Plastiq has raised $8.25 million from venture capital firms in two rounds of   
   financing. Its goal is to bring credit cards into markets where they haven’t   
   been accepted before.   
      
   As well as education and income taxes — H& R Block Canada announced a   
   marketing deal with Plastiq last month — the company plans to get into   
   apartment rentals by working with large property management firms.   
      
   “We tried to develop a product that was very simple. All payments happen   
   securely at Plastiq.com,” says Buchanan.   
      
   As for Ades, he likes working with a team of young people the same age as his   
   children.   
   “Half of them show up in hoodies and half in suits. It’s a real mix,” he says.   
      
   Ellen Roseman writes about personal finance and consumer issues. You can reach   
   her at eroseman@thestar.ca or www.ellenroseman.com    
      
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   Miss a Tax Tale Miss a lot!    
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