Published on 13 Sep, 2023

Guide to Claiming Fuel Tax Credit for Your Business

Written by:
Thomas S Phabmixay
General Manager

Page Contents

Claiming Fuel Tax Credits is an opportunity for businesses who have bought fuel, such as petrol, diesel, or other eligible fuels, for business activities. The tax credit, determined in cents per litre, can be claimed when submitting the Business Activity Statement (BAS) for the current financial year, or up to four years from the purchase of the fuel.

The Fuel Tax Credit rates are updated twice a year, in February and August, and are influenced by changes in the Consumer Price Index (CPI) and the price of fuel. These changes take into account factors like excise or customs duty, ensuring businesses get the most accurate rate for their claims.

Different types of vehicles and uses of the fuel can influence the credits you can claim. For example, heavy vehicles such as diesel trucks might have different Fuel Tax Credit rates compared to light vehicles. Furthermore, the fuel consumed on public roads attracts a road user charge, while fuel used on private roads may have a unique rate.

Recent changes to Fuel Tax Credits

In July 2024, the rates for biodiesel (B100) were adjusted as part of the regular updates to excise tax rates. Fuel tax credit rates are now indexed twice a year, in February and August, to reflect changes in the consumer price index (CPI). The most recent adjustment occurred on 5 August 2024.

It’s important to note that the fuel tax credit rates can vary based on the type of fuel and its use. For instance, rates may differ for fuel used in heavy vehicles traveling on public roads due to changes in the road user charge. For current and past fuel tax credit rates, use the fuel tax credit calculator to determine the correct amounts for your Business Activity Statement (BAS). Remember to claim your credits within four years of the earliest BAS due date to remain eligible.

Understanding Eligible Vehicles and Fuels for Claiming Fuel Tax Credits

When it comes to claiming Fuel Tax Credits, not all vehicles and fuels are treated equally. Specific types of vehicles and fuels are eligible for this tax credit, which can be claimed via your Business Activity Statement (BAS).

Eligible Vehicles for Fuel Tax Credits

On-Road Vehicles

For vehicles used on public roads, the following types can claim fuel tax credits:

Waste collection vehicles
Concrete transport vehicles
Refrigerated vehicles
Vehicles equipped with sleeper cabins for long-haul travel
Heavy vehicles with specialised auxiliary power equipment, such as trucks used for loading/unloading, elevated work platforms, truck-mounted cranes, drilling and pumping equipment, and blowers for dry products.

Off-Road Vehicles

Vehicles considered to be exclusively used on off-public roads include:

Graders
Backhoe Loaders
Front-end Loaders
Wheeled Excavators
Forklifts
Wheeled Bulldozers
Fertilizer Spreaders
Combine Harvesters
Tractors

Approved Fuels for Fuel Tax Credits

When it comes to fuels, the following types are eligible to claim Fuel Tax Credits:

Liquid fuels: like petrol and diesel
Blended fuels: such as B5, B20, E10
Liquefied Petroleum Gas (LPG) [duty-paid]
Liquefied Natural Gas (LNG) or Compressed Natural Gas (CNG) [duty-paid]
Other blended fuels: E85 or B100

Each type of fuel and vehicle has its own Fuel Tax Credit rate, expressed in cents per litre, which could be influenced by excise or customs duty. These rates can be found when you’re filing your Business Activity Statement (BAS), and they are subject to change, often revised based on the Consumer Price Index (CPI) or fluctuations in the price of fuel.

So, if you’re in a business that uses these types of vehicles and fuels for your business activities, make sure to check the current Fuel Tax Credit rates to maximize your claim.

A Fuel Rate Table Displaying Fuel Prices for Various Types, Including Liquid Fuels (e.g., Petrol or Diesel), Blended Fuels (e.g., B5, B20, E10), Liquefied Petroleum Gas (LPG), Liquefied Natural Gas (LNG) or Compressed Natural Gas (CNG), and Blended Fuel (E85 or B100) Acquired between February 1, 2023, and June 30, 2023.

How to Accurately Report Fuel Tax Credit Rates

When reporting Fuel Tax Credit rates, it’s vital to ensure accuracy and compliance. You’ll need to include the rates in your Business Activity Statement (BAS), which is submitted either monthly or quarterly, depending on your reporting schedule.

Always verify the type of eligible fuel used in your vehicle. Moreover, it’s crucial to accurately compute and report the excise tax or excise duty paid on the fuel within your BAS. This ensures you’re claiming the correct amount for Fuel Tax Credits related to your business activities.

Guidelines for Claiming Fuel Tax Credits

To file for Fuel Tax Credits, certain documents are essential for an accurate and compliant claim. You’ll need the following:

A logbook detailing the start and end dates for the specific period you’re claiming for.
Dates for each journey you’ve logged.
Odometer readings taken before and after each trip.
An account of the purpose for each trip and the number of kilometres traveled.
The percentage of overall business use as recorded in the logbook.
Odometer readings at both the beginning and end of each income tax year, as documented in the logbook.

A chart outlining the necessary documentation for filing Fuel Tax Credit claims, including logbooks, bank statements, tax invoices, supplier statements, calculation worksheets, GPS data, and Telematics records.

To accurately claim Fuel Tax Credits on your Business Activity Statement (BAS), meticulous record-keeping is essential. Required documents can include contracts specifying fuel-used activities, tax receipts for fuel purchases, and GPS data for off-road travel.

Heavy vehicle operators may claim additional tax credits for fuel consumed by auxiliary equipment, provided the vehicle’s gross mass exceeds 4.5 tonnes. Various fuel types and storage methods are subject to specific conditions.

For non-heavy vehicles used on both public and private roads, you’ll need to calculate the proportion of off-road use to claim accordingly. This remains true even if public roads are used to connect private properties.

Guide to Calculating Fuel Tax Credits: On-Public vs Off-Public Road Use

For businesses with heavy vehicles, calculating the amount to claim in Fuel Tax Credits can be straightforward, especially if you need to account for both on- and off-public-road usage. Off-public-road rates are generally higher, increasing the credits you can claim on your Business Activity Statement (BAS). The ATO’s fuel tax credit calculator is a useful tool for determining these amounts.

Step 1: Calculate Diesel Consumption on Public Roads

To accurately claim fuel tax credits, you’ll first need to figure out the litres of diesel used on public roads. The formula employed for this calculation is:

Diesel consumption rate x kilometres traveled on public roads.

There are two methodologies to figure out the kilometres you’ve travelled on a public road:

Actual Kilometres Traveled: For this, you must possess records proving the distance you covered. This typically means maintaining logs or records, which can be critical when you’re filing your Business Activity Statement (BAS) to ensure you claim the right amount.
Derived Kilometres Traveled: With this approach, you determine the kilometres by multiplying your total travel distance by 98.4%. It’s a standard estimation but, even if you choose this method, it’s beneficial and recommended to retain accurate records reflecting your complete distance traveled.

Whether you use the actual or derived method, these calculations are instrumental in ensuring you accurately claim fuel tax credits in relation to the diesel fuel consumed for your business activities on public roads.

Step 2: Calculating Diesel Consumption Off Public Roads

To accurately determine the litres of diesel consumed off public roads for your Fuel Tax Credit claim, you can use the following formula:

Total litres of eligible diesel – Litres of diesel used on public roads.

This calculation helps you isolate the diesel consumption specific to off-public road usage, making it easier to report in your Business Activity Statement (BAS). Accurate calculations are vital for claiming the appropriate Fuel Tax Credit rates, which are expressed in cents per litre.

Step 3: Determining Your Fuel Tax Credits for the Reporting Period

To correctly determine the Fuel Tax Credits you can claim for a specific tax period, employ the following formula:

(Diesel litres consumed on public roads x Public road rate) + (Diesel litres used off public roads x All other business uses rate).

Next Step is to Contact TMS Financials

TMS Financials provides you with a team of experienced professionals that help you achieve your financial goals through smart tax structures and strategic financial structuring. We’re a one-stop shop for all financial needs and pride ourselves on building strong partnerships with our clients.

Book a free financial health review to see the difference we can make in your financial future.

Book a free accountant consultation with TMS CPA Accountants your specialists in Sydney Australia.

Disclaimer

This outline is for general information only and not as legal, tax or accounting advice. It may not be accurate, complete or current. It is not official and not from a government institution. Always consult a qualified professional for specific advice tailored to your unique circumstances.