Can You Use a Credit Card to Pay CRA Taxes in 2025? Costs, Dangers, and Better Options Explained
When it comes to paying taxes in Canada, making timely payments is crucial to avoid unnecessary penalties and interest.
The Canada Revenue Agency (CRA) offers several convenient options for paying taxes, including the ability to use your credit card through third-party services.
If you’re considering this option, here’s a detailed overview of what you need to know before you make a payment.
Can You Pay Taxes with a Credit Card in Canada?
While the CRA does not directly accept credit card payments, there are third-party services like PaySimply and Plastiq that facilitate credit card transactions.
These services allow you to use your credit card to pay the CRA, although they typically charge a service fee for the convenience.
Important Considerations When Using Credit Cards for Tax Payments:
- Service Fees: Be prepared to pay a service fee when using a third-party provider.
- Personal Information: You will need to provide personal information, such as your Social Insurance Number (SIN), to ensure that the payment is correctly applied to your tax account.
- Payment Confirmation: Use CRA’s “My Account” portal to confirm that your payment has been received.
It’s important to ensure that you pay well in advance, as you are ultimately responsible for making sure the payment reaches the CRA on time.
Benefits of Paying Taxes with a Credit Card
There are several potential benefits to paying your taxes using a credit card:
Advantages
- Convenience: Online payment services allow you to pay taxes from anywhere, anytime.
- Credit Card Rewards: Depending on your card, you could earn rewards, cash-back, or travel points for making the payment.
- Extended Payment Period: The time between your credit card statement and due date may give you extra weeks to pay your taxes before interest is charged.
Drawbacks of Using a Credit Card for Tax Payments
While there are benefits, paying taxes with a credit card may not always be the best option for everyone. Consider these potential drawbacks:
Disadvantages
- High Service Fees: The fees charged by third-party services might outweigh any rewards you earn from your credit card.
- High Interest Rates: If you cannot pay off the credit card balance by the due date, you may face interest rates of 20% to 23%, significantly higher than the CRA’s 10% penalty interest rate.
How to Pay Taxes with a Credit Card Using PaySimply
If you choose to use PaySimply, a service partnered with the CRA, the process is straightforward. Here’s how to make a payment:
Steps to Pay with PaySimply
- Choose Your Payment Type: Select the tax type (e.g., Individual (T1) 2023 tax return).
- Enter Personal Details: Input your email, SIN, name, and payment amount.
- Provide Payment Information: Enter your credit card details.
- Review and Submit: Double-check your payment information and submit. You’ll receive an email confirmation once your payment is processed.
PaySimply Fees
- Credit Card Fee: 2.5% of the total payment amount.
- Payment Time: Payments take about three business days to reach the CRA.
How to Pay Taxes with a Credit Card Using Plastiq
Plastiq is another third-party service that allows you to make credit card payments for organizations, including the CRA.
Steps to Pay with Plastiq
- Create an Account: Set up your Plastiq account and select “Pay.”
- Add CRA as a Vendor: Choose Canada Revenue Agency as the payee and opt for paper check delivery.
- Enter Payment Details: Provide your full name, SIN, tax type, and tax year.
- Choose Delivery Date and Submit: Set a delivery date and finalize the payment.
Plastiq Fees
- Credit Card Fee: 2.9% of the payment amount plus an additional $1.49 for delivery.
- Payment Time: Payments take between 7 to 10 business days to reach the CRA.
Other Ways to Pay Your Taxes in Canada
If paying with a credit card isn’t ideal for you, there are several alternative ways to pay your taxes:
Online Payments
- Bank Transfer: Transfer funds from your bank account by adding the CRA as a payee.
- Pre-authorized Debit: Set up automatic withdrawals through CRA’s “My Account” portal.
- Third-party Services: Use services like PaySimply to pay by debit card or PayPal.
In-Person Payments
- Banks: Visit your bank with a remittance voucher to pay by debit card, cheque, or money order.
- Canada Post: Use a QR code at Canada Post locations to pay via cash or debit card.
By Mail
- Cheque: Write a cheque to the Receiver General for Canada and mail it along with your remittance voucher.
What to Do If You Can’t Afford Your Tax Payment?
If you owe more than you can afford to pay, avoid using high-interest credit cards.
The CRA offers payment arrangements where you can set up a monthly installment plan through your CRA “My Account” portal or by contacting them directly.
Paying taxes in Canada with a credit card is an option for those looking for flexibility, but it comes with fees and potential interest rates.
While third-party services like PaySimply and Plastiq make it possible, it’s important to evaluate whether the benefits outweigh the costs.
If paying by credit card doesn’t suit your financial situation, there are plenty of other ways to settle your tax bill, including online, in-person, and by mail.
By staying on top of your payment deadlines and exploring your options, you can avoid penalties and ensure your taxes are paid efficiently.
FAQs
Can I directly use my credit card to pay the CRA?
The CRA does not accept direct credit card payments. You must use third-party services like PaySimply or Plastiq, which charge a service fee for processing the payment.
What are the service fees for paying taxes with a credit card?
The fees vary depending on the service provider. PaySimply charges a 2.5% fee, while Plastiq charges a 2.9% fee, plus an additional $1.49 for delivery.
How long does it take for a credit card payment to reach the CRA?
Payments made via PaySimply typically take about three business days, while payments through Plastiq may take 7 to 10 business days.