Taxing Miles in Australia

Paying business expenses on personal credit cards for the miles is a time-honored tradition. And there’s even a new company, Zevez, which helps businesses run their accounts payable through rewards credit cards in order to capture cash back or frequent flyer miles.

But the practice of earning miles by charging business expenses to a credit card may be coming to an end in Australia.

Australian taxpayers earning miles on business travel are clearly not liable for the tax. However a new Australian Tax Office initiative (“ATO Practice Statement”) will tax business people earning miles on their personal credit cards.

The tax office will scrutinize Australians who earn 250,000 or more frequent flyer miles in a year to determine whether those miles are being earned by putting business expenses on personal cards “for no economic purpose” other than to secure rewards. (The tax office will judge the validity of the decision – a small business owner might put expenses on a card for convenience and cashflow and in that case it would be alright and nontaxable for them to also receive award points. Bizarre.)

    People who receive more than 250,000 reward or frequent-flyer points in a year will be audited as part of the crackdown, as will anyone who pays business expenditure with their card for no commercial purpose other than to secure a reward.

    Tax experts said the Tax Office might also contact the credit card companies or airlines such as Qantas directly for a list of the names of those who have accrued more than 250,000 points in the year.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. Fringe benefits tax deals with frequent flyer points for business trips. It is still an interesting debate, but I can’t see how they should be taxed. Next they’ll want to tax the benefit of a good view from an office space.


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