Earning AmEx Points Using 'Cost of Goods Sold' Legal/Grey/Ok?

Having a discussion with my wife regarding earning points on Amex or similar.

She is in a partnership running a small business in Australia.
The business is in it's 2nd year and doing well.
Clients transfer money into the business's account and the business then makes purchases on their behalf.
The business acts as the supplier or middle man whilst passing on saving to the clients for goods purchased.

The big question is…

If the business has a AmEx card with a high limit, can the business make said purchases with the credit card, gain points and then pay it back with the clients money?

This isnt about ripping anyone off, its simply about whether you can earn points using a client money basically.

Is this legal, dodgy or totally fine??

thanks in advance for any constructive comments,



  • Why wouldn't it be ok?

  • +2 votes

    Its fine.
    Similar to paying it by cash - just another way the business finances itself.
    Like you said, the business purchases on behalf of clients. How you choose to purchase is up to you.

  • Amex fund the rewards points by charging merchants for purchases.

    As long as they are getting their merchant charges, they wouldn't care who is the actual buyer of the goods.

  • there is a liquidity risk (u dont get the money from the client fast enough) and counterparty risk, they take the goods and dont pay!

    • I read the Op's business model as their clients/customers pay upfront.

      What I'm more curious about is whether the Op ever has legal title over the goods or if they go straight to the end customer. ie are they a principal or just an agent in the transaction.

      • the business acts as a supplier. Ie, the client wants 10k worth of furniture at trade price, client gets said furniture and business takes a margin as profit. In regards to being principal im really not sure.
        its a little grey sometimes.

    • She always ensures the clients pay the business account prior to any goods purchased….
      the business always has the money first!

  • I don't see anything wrong with what you've described.

  • This is what probably every business does to some degree.

  • Niceee

  • +3 votes

    You don't need a high limit either, just move the funds to the amex account before the purchase.

    • oh really thats interesting, so you can credit the Amex, make purchases and thats it. Some of the purchases are in the 10k range.

      • Yes. You can call Amex to double check but basically if you remain below the credit limit they don’t care. (Also if you go over the limit you just get charged a fee)

  • Put it this way, if youre a small business and not a multi national corp especially, its fine.

    As long as you do the tax side of it you are fine.

    Think of it as a benefit of having your own business or having that opportunity.

    Some people dont do it because its more time consuming, which it is

    But I know heaps of people who earn millions of points a year,

    Think of it as a blessing, start earning!

  • Even better if you buy the goods with discounted gift cards and use cash back sites.

  • Amex will be happy as they earn commission on purchases.

  • There is nothing wrong. This is a business, and another way of growing the business revenue stream. This is like we pay tickets to travel in public transport, and the transport operator sells space on the bus/train to advertisers.
    However, what you need to be mindful is that these points would belong to the business, not to you. In the business books it will have to disclose the value of these as current assets, or show income if these are redeemed or sold. Although, the business could sell the points to your wife when you are looking to book round the world business class tickets.

  • Theoretically the thing you might want to look up and read about is Fringe Benefits Tax

  • Negotiate a discount of more than 3% for using cash/bank transfer, and bank that as savings instead of MR

  • As others have said look at the ATO ruling on this. I believe the ATO has a let it go approach until the business earns around 150,000 points a year. If you use the points personally then FBT is expected to be paid by the business. If the business uses the points then there shouldn’t be an issue as profit would therefore be higher and tax will be paid by the business on the profit.

    • 150k points could be as low as about a $75k purchase? Would she be below this threshold?

      • Sorry I went and looked up the comments from the ATO they have a do not audit approach for less than 250k points pa. If you were running this you would want to run a card that is a 1 point earned for 1 spent type card. Say a Qantas or Velocity card. Rather than say an AMEX where is it 2 or 3 points earned then converted back to the respective programs at 1 Qantas/Velocity point for every 2 or 3 AMEX points.

  • The client places a request for "item" and pays your business in whatever fashion…. you then order the "item" and pay in whatever fashion (via card).
    It does not matter - as long as the books are balanced, and tax is paid appropriately.
    If you find a "bonus" in paying via your card, then good for you…. but maybe Amex may have their own regulations — like Fair Usage.