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Fuel Tax Credits Explained

by | May 19, 2021 | BAS, Tax Returns & Financial Statements, Small Business Handbook

Fuel Tax Credits Explained

Claiming fuel tax credit can provide a significant reduction in the amount of tax you pay on your business’s operating costs. 

Yet, claiming these fuel tax credits is often overlooked by many small business owners. 

To help make the claiming process a bit easier, we’ve put together an article that breaks down everything you need to know about fuel tax credits, including rates and eligible fuels and activities.

 

What Are Fuel Tax Credits?

The Australian Tax Office allows you to claim fuel tax credits for the tax (excise or customs duty) levied on the fuel you use to carry out various business activities. 

You must be registered for Goods and Services Tax (GST) as well as fuel tax credits before you can make your claim. 

The ATO has a helpful online eligibility tool that you can use to determine if you’re eligible to claim fuel tax credits. 

Once you’ve established that you’re eligible, you can register your business here.

 

Eligible Business Activities

Your business can claim fuel tax credits if it uses fuel in: 

  • machinery; 
  • heavy vehicles which weigh over 4.5 tonnes; 
  • light vehicles travelling on private roads (not on public roads); and 
  • other plant and equipment. 

 

Taxable Fuels You Can Claim

You can claim fuel tax credits on the following taxable fuels: 

  • Liquid fuels such as petrol, diesel and other fuels such as kerosene, white spirit, heating oil, toluene as well, as mineral turpentine
  • Fuel blends such as blends of biodiesel and diesel (with 20% or less biodiesel) as well as fuel ethanol and petrol (with 10% or less ethanol) 
  • Gaseous fuels such as liquefied petroleum gas, liquefied natural gas and compressed natural gas

 

What Can You Claim Fuel Tax Credits?

You’ll claim the fuel tax credits on your business activity statement (BAS). Before you can claim fuel tax credits on your BAS, you need to calculate the amount you can claim.

The amount of credit you can claim will be dependent on: 

  • what fuel you use; 
  • the business activity you use the fuel for; and 
  • when you purchased the fuel. 

 

Fuel Tax Credits Rate

You must keep up to date with the fuel tax credits rate because it’s adjusted each year around February and August. 

So you’ll have to ensure that you check the rate before you complete your BAS. 

The table below indicates the fuel tax credits rates applicable for the period 1 February 2021 to 20 June 2021: 

Fuel Type Heavy Vehicles Traveling on Public Roads Other Business Uses
Liquid fuel  16.9 cents per litre 42.7 cents per litre
Blended fuel 16.9 cents per litre 42.7 cents per litre
Gaseous fuel: liquefied petroleum gas 0.0 cents per litre 13.9 cents per litre
Gaseous fuel: liquefied natural gas and compressed natural gas 0.0 cents per litre 29.3 cents per litre

You can view the fuel tax credit rates for fuel acquired during any other period on the ATO’s website. 

The ATO also has a fuel tax credits calculator you can use to calculate the amount you can claim. 

 

Fuel Tax Claims Under $10,000

Because the fuel tax credits rate changes so often, it’s possible to have more than one rate in a BAS period. You would then have to take into account each rate when calculating your claim. 

However, if you claim less than $10,000 in fuel tax credits each financial year, then the ATO allows you to use a simplified method that takes into account the rate that applies at the end of the BAS period.

So, you won’t have to split your fuel purchases and use the different rates. You’ll simply have to add the total litres used and use the applicable rate on the last day of the BAS period to calculate your claim. 

 

Fuel Tax Credits And Your Tax Return

The ATO considers any fuel tax credits claimed during the financial year as business income, so you’ll need to include the credits in your tax return. 

You’ll add the total fuel tax credits under the “assessable government industry payments” section of your tax return. 

 

Key Takeaways

Before you can claim your fuel tax credits, you must have registered your business for GST and fuel tax credits. 

The registration process is relatively simple, and you can access the form on the government’s business website. 

Once you’ve registered, you can claim credits for taxable fuel used to conduct eligible business activities. The fuel tax credits rate changes twice a year, so you must check the ATO’s website and use the applicable rate when claiming on your BAS. 

While the ATO does offer some useful eligibility and calculating tools, you may want to consult with a qualified tax agent or accountant who can ensure that you’re making the most of your fuel tax credits claim. 

At Box Advisory Services, we can help you: 

  • calculate and claim your fuel tax credits; 
  • lodge your BAS statement; and 
  • take advantage of all your tax claims when it comes time to submit your tax return. 

Simply book a FREE consultation with us or give us a call to discuss how we can help you. 

 

 

Disclaimer:
Please note that every effort has been made to ensure that the information provided in this guide is accurate. You should note, however, that the information is intended as a guide only, providing an overview of general information available to property buyers and investors. This guide is not intended to be an exhaustive source of information and should not be seen to constitute legal, tax or investment advice. You should, where necessary, seek your own advice for any legal, tax or investment issues raised in your affairs.
fuel tax credits