What are Fuel Tax Credits?

A Fuel Tax Credit is a type of tax credit available to business owners who have purchased fuel for their business, be it petrol, diesel, or other kinds of eligible fuel. You can claim Fuel Tax Credits when you file your Business Activity Statement (BAS) either for the current financial year or for up to four years after the fuel was purchased.

Fuel Tax Credits rates change up to twice a year (in February and August) based on changes in the Consumer Price Index (CPI).

It's important to note that diesel vehicles may have different rates than light vehicles, and the use of fuel on public roads may attract a road user charge. Fuel used on private roads may also have distinct rates. Therefore, the amount you can claim may depend on various factors, including the type of fuel, how it's used, and current rates that are influenced by excise or customs duty.

Recent changes to Fuel Tax Credits

In July of 2022 the rates for biodiesel (B100) were changed due to increased excise tax rates. The tax rates (excise and excise equivalent) for fuel, diesel, and all other fuels have decreased from 30 March to 28 September 2022.

If you purchased the fuel after 30 March 2022 and it includes the increased duty paid by the manufacturer or distributer, the rate may exceed the Fuel Tax Credit you can claim on your Business Activity Statement (BAS). The fuel tax rebate for on-road business fuel usage has been reduced to 0 cents per litre in March 2022.

What kinds of cars and fuels qualify for Fuel Tax Credits?

The vehicles that qualify to receive Fuel Tax Credits are as follows:

On road vehicles

Vehicle types treated as used on public roads

• vehicles that collect waste
• vehicles that transport concrete
• vehicles with refrigeration
• vehicles that contain sleeper cabins for travelling extended distances
• heavy vehicles and vehicles that have special power auxiliary equipment, such as unloading/loading trucks, raised labour platforms, truck-mounted loader cranes, drilling and pumping equipment, and truck-blowers for dry products

Off road vehicles

Vehicle types treated as used fully off public roads:

• grader
• backhoe loader
• front-end loader
• wheeled excavator
• forklift
• wheeled bulldozer
• fertilizer spreader
• combine harvester
• tractor

The approved fuel types that can be claimed for Fuel Tax Credits are as follows:

• liquid fuels (i.e. petrol or diesel)
• blended fuels (i.e. B5, B20, E10)
• Liquefied Petroleum Gas (LPG) [duty paid]
• Liquefied Natural Gas (LNG) or Compressed Natural Gas (CNG) [duty paid]
• blended fuel (E85 or B100)

How do I report Fuel Tax Credit rates?

You must include the Fuel Tax Credit rates on your Business Activity Statement (BAS) every quarter or month. Be sure to check the eligible fuel type of your vehicle. It is important that you report and compute the fuel excise tax or excise duty paid properly in the BAS.

What documents are required to file for Fuel Tax Credit rates?

The documents that you need in order to file for Fuel Tax Credits are as follows:

• a logbook period with the beginning and ending of the period
• a date for each trip you record
• a record of the odometer reading both before and after the trip for every trip
• the purpose of the trip and the number of kilometres traveled per trip
• the percentage of overall business use recorded in the logbook
• the reading (both beginning and ending) for each income tax year that are kept in the logbook

You need to keep accurate records if you file Fuel Tax Credit claims. An example is a copy of a contract that details the activities which you used the fuel for, or tax receipts that show when you purchased the fuel, GPS data if the large vehicle travelled off public highways.

Additional tax breaks for operators of heavy vehicles may be claimed for the fuel used to power auxiliary equipment of the vehicle. The additional tax break is only available to heavy vehicles (including emergency vehicles) with a gross vehicle mass higher than 4.5 tonnes, and is subject to specific conditions regarding fuel types. This fuel that is used to power auxiliary equipment may come from a separate fuel tank or the tank that is used to fuel the core engine. The additional auxiliary equipment may also be used for the main machine.

You will need to calculate the proportion of off-road use and only claim that amount in the event that your non-heavy vehicle is used both on and off road. This even applies in the event that you use a public highway to get from one private property to another.

Fuel Tax Credit Calculator tools for businesses (basic method for heavy vehicles)

The basic method for calculating the Fuel Tax Credit amount for heavy vehicles is simple if you want to work out both on- and off-public-road use. As the rate for off-public roads is much higher than the rate for on-public roads you might receive for Fuel Tax Credits if you compute for off-public-road use. The ATO's fuel tax credit calculator is a helpful tool for calculating fuel tax credits.

Step 1: Calculate litres of diesel used on public roads

The formula used to calculate litres of diesel used on public roads is:

diesel consumption rate x by kilometres traveled on public roads.

There are two ways to calculate the number of kilometres traveled on a public road:

1. Using the actual number of kilometres travelled
2. Using the derived number of kilometres travelled

For the first method, you must have records demonstrating you travelled the distance. For the second method, you will need to multiply the total kilometres travelled by 98.4%. Even if you opt for the second method it is still good practice to keep accurate records showing your overall kilometres travelled.

Step 2: Calculate the litres of diesel used off public roads

The formula used to calculate litres of diesel used on off-public roads is:

total litres of eligible diesel - (minus) the litres of diesel used on public roads.

Step 3: Calculate your Fuel Tax Credits for the tax period

The formula you use to calculate your Fuel Tax Credits for the tax period is:

Diesel litres used on public roads times by the public road rate + (plus) diesel litres used off public roads x (times by) all other business uses rate.

Next Steps

In summary, you can claim for Fuel Tax Credits by following these steps:

1. Check if you're eligible for fuel tax credits
2. Make sure you're registered
3. Check the time limit for making a claim
4. Review the amount of fuel you can claim
5. Calculate your fuel tax credits
6. Check the fuel tax credit rates
7. Claim your fuel tax credits
8. Record credits in your tax return

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