With fuel being a huge business cost, it makes sense to reduce your outgoings as much as possible. A way to do that is to claim a fuel tax credit. A credit can be claimed for the tax on fuel, such as excise or customers duty included in the price of fuel and is known as the Fuel Tax Credit (FTC).
Fuel used isn’t limited to vehicles. Fuel used in machinery, operating plant equipment, and both heavy and light vehicles. Credits claimed are based on when the business bought the fuel, the fuel used and the business activity the fuel is used for.
Pro Tax Tip: Fuel tax credits change on a regular basis. Check in regularly for the latest rates each time your lodge your BAS. Your business must be registered for GST to claim fuel tax credits.
Fuel Tax Credit Rates
The fuel tax credit rate is indexed twice a year in February and again in August. Rates are based on the upwards movement of the Consumer Price Index (CPI). Rate may also change in July for those heavy vehicles that use public roads.
Some exceptions apply on light vehicles of 4.5 tonnes gross vehicle mass (GVM) or less and those vehicles travelling on public roads.
Fuel Eligibility
Not all fuel is equal, and neither is the fuel tax credit. Eligibility criteria on liquid, gaseous and blended fuels apply.
Pro Tax Tip: When claiming blended fuels, the claimable rate will depend on the biodiesel or ethanol amounts.
Eligible fuels include:
- Petrol
- Diesel
- Other fuels such as kerosene, mineral turpentine, white spirit, toluene, heating gas and some solvents.
From December 2011, gaseous fuels became eligible. These fuels include liquefied petroleum gas (LPG), liquefied natural gas (LNG) and compressed natural gas (CNG). Criteria based on transport and non transport fuels apply.
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Activity Eligibility
The fuel tax credits can only be claimed when using fuel for certain activities. The credits can be claimed for use in heavy vehicles, including heavy emergency vehicles that travel on public roads providing they are used when carrying on a business and has a GVM greater than 4.5 tonnes.
Pro Tax Tip: The fuel used isn’t limited to power the vehicle. Fuel used in lights, brakes, power-steering, windscreen wipers, air-conditioning and power used in auxiliary equipment can be claimed.
Business Uses
Fuel tax credits aren’t limited to businesses using heavy and light vehicles. Fuel used to power machinery in the following businesses can be claimed:
- agriculture
- fishing
- forestry
- mining
- marine and rail transport
- nursing and medical services
- burner applications
- electricity generation by commercial generator plant, stationary generator or a portable generator
- construction
- manufacturing
- wholesale/retail
- property management
- landscaping
- dredging
- panel beating
- greenhouse heating
- cement kilns
- quarrying
- industrial furnaces
- non-fuel uses, including
- fuel you use to clean machinery parts or drums
- diesel you spray directly onto a road as a sealant
- fuel you use as a mould release
- fuel you use as an input or ingredient – for example, printer inks, paint and adhesives.
The amount of credit that can be claimed for a vehicle depends on the type of roads the vehicle uses. Public and private roads have an off-road and on-road FTC rate. The off-road rate is equal to the amount of excise paid on fuel. The on-road rate is calculated by subtracting the Road User Charge (RUC) from the full rate of excise payable on the fuel.
Fuel Tax Credit Rates
All fuel tax rates are listed in cents per litre unless otherwise stated.
Fuel rates for fuel acquired from 1 February to 30 June 2021
| Eligible fuel type | Unit | Used in heavy vehicles | All other business uses (including to power auxiliary equipment of a heavy vehicle) |
| Liquid fuels – for example, diesel or petrol | cents per litre | 16.9 | 42.7 |
| Blended Fuels: B5, B20, E10 | cents per litre | 16.9 | 42.7 |
| Blended fuel: E85 | cents per litre | 0.0 | 18.305 |
| Liquefied petroleum gas (LPG) | cents per litre | 0.0 | 13.9 |
| Liquefied natural gas (LNG) or compressed natural gas (CNG) | cents per kilogram | 0.0 | 29.3 |
| B100 | cents per litre | 0.0 | 7.1 |
Fuel rates for fuel acquired from 1 July 2020 to 31 January 2021
| Eligible fuel type | Unit | Used in heavy vehicles | All other business uses (including to power auxiliary equipment of a heavy vehicle) |
| Liquid fuels – for example, diesel or petrol | cents per litre | 16.5 | 42.3 |
| Blended Fuels: B5, B20, E10 | cents per litre | 16.5 | 42.3 |
| Blended fuel: E85 | cents per litre | 0.0 | 18.16 |
| Liquefied petroleum gas (LPG) | cents per litre | 0.0 | 13.9 |
| Liquefied natural gas (LNG) or compressed natural gas (CNG) | cents per kilogram | 0.0 | 29.0 |
| B100 | cents per litre | 0.0 | 7.1 |
Pro Tax Tip: It’s best to be aware of the date for claiming because there are limits on time and amending your claims.
Calculating FTC can be complicated. It’s best to claim the right amount rather than amending. ITP Accounting Professionals understand the intricacies of claiming all types of tax credits and makes sure that nothing is forgotten. Chat with a friendly accounting professional and see how much we can help you save on your business expenses.