Fuel Tax Credits

Fuel Tax Credits, Can You Claim Them?

If your business uses fuel for machinery, equipment or certain vehicles, you may be able to claim a credit for the fuel tax (excise or customs duty) that is included in the price of the fuel you purchase. Fuel tax credits help reduce the cost of fuel used in eligible business activities but not all fuel use qualifies, and there are specific rules you must follow.

What Are Fuel Tax Credits?

Fuel tax credits provide a credit for the fuel tax that is included in the price of fuel used in your business activities. It is basically a way of getting back some of the excise or customs duty paid on fuel when it is used for certain business purposes.

Who Can Claim Them?

To claim fuel tax credits, your business must:

• Be registered for GST, and
• Be registered for fuel tax credits with the Australian Taxation Office (ATO).

If you are not registered for GST, you generally cannot claim fuel tax credits for business use (there are separate rules for non-business claimants such as individuals or non-profits, but not for general business fuel usage).

What Fuel and Uses Are Eligible?

Fuel tax credits are available for taxable fuel, that is fuel on which excise or customs duty has been paid. This includes things like diesel, petrol, gaseous fuels and some fuel blends.

You may be eligible to claim credits for fuel used in:

• Machinery, plant, and equipment in your business
• Heavy vehicles used on public roads (above certain weights)
• Light vehicles used off public roads or on private property
• Other business activities where the fuel is not used for private purposes

However, fuel used in light vehicles (under 4.5 tonnes GVM) travelling on public roads generally cannot be claimed.

How Much Can You Claim?

The amount you can claim depends on:

• The type of fuel you used
• How you used the fuel (the eligible activity)
• When you acquired your fuel, because fuel tax credit rates change regularly, typically every six months.

The ATO provides tools and calculators to help work out the correct amount based on fuel quantity and applicable rates.

How to Claim Fuel Tax Credits

Once you are registered for fuel tax credits and GST, you make your claim on your Business Activity Statement (BAS):

• Enter your total eligible fuel tax credits at the appropriate label (label 7D on your BAS).
• Include any adjustments if your estimated use changes.

If you discover you overclaimed in a previous period, you can also make adjustments on your current BAS (label 7C) to correct it.

Record-Keeping Requirements

You must keep evidence to support your claim. Typical records include:

• Fuel invoices or receipts showing purchases
• Details of how the fuel was used in business activities
• Calculations showing how you worked out your claim

If you claim more than a small amount each year, having good records ensures you can substantiate your claim if the ATO asks.

Time Limits for Claims

Fuel tax credits generally must be claimed within four years of the date you acquired the fuel. If you miss this window, you may lose the entitlement to claim those credits.

Tips for Small Business Owners

• Use the ATO’s Fuel Tax Credit Eligibility Tool to check whether your fuel use qualifies before claiming.
• Fuel tax credit rates change regularly, always check the correct rate for the period you acquired fuel.
• Claims must reflect actual use and quantity, not just the cost of fuel.
• If you are unsure or claim is complex, consider assistance from a registered BAS agent or tax professional.

Final Thoughts

Fuel tax credits can offer valuable savings for businesses that rely on fuel for machinery, equipment or heavy vehicles. However, understanding eligibility, correct use classifications and accurate calculation is essential to ensure compliance and maximise your claim.