Published on 05 May 2025
Claiming all your Fuel Tax Credits is a crucial strategy for Australian businesses that seek to minimize expenses while ensuring full compliance with tax regulations. In today’s competitive economic, fuel expenses represent a significant portion of operating costs for many companies, particularly those in the transportation, construction, and agricultural sectors. With constantly compliance requirements and adjustments in fuel tax credit rates, businesses must remain informed and proactive to maximize their potential savings.
Understanding Fuel Tax Credits in Australia
Fuel tax credits are rebates offered by the Australian government which allow eligible businesses to recover a portion of the fuel tax paid on taxable fuel used in business activities. The concept is straightforward: when you purchase taxable fuel for operating heavy vehicles, auxiliary equipment, or other eligible machinery, you are entitled to claim back the excise or customs duty included in the price of fuel. This credit can result in significant savings when properly applied to your business activity statement (BAS).
The Fuel Tax Credit (FTC) benefit is available to GST-registered businesses in Australia, allowing them to claim back a portion of excise or customs duty paid on liquid fuels such as diesel and petrol, as well as gaseous fuels like Liquefied Natural Gas (LNG) and Compressed Natural Gas (CNG). Many businesses overlook this valuable opportunity to reclaim expenses, potentially leaving thousands of dollars unclaimed each year.
Eligibility and Key Considerations
To claim fuel tax credits, your business must be registered for Goods and Services Tax (GST) and fuel tax credits. Eligible fuels include liquid fuels like diesel and petrol, blended fuels such as B5 or E10, and gaseous fuels like LPG or LNG. However, not all fuel consumption qualifies—for example, light vehicles traveling on public roads are typically excluded from eligibility.
Fuel tax credits can be claimed for business use of taxable fuel in activities such as operating machinery, plant equipment, heavy vehicles over 4.5 tonnes gross vehicle mass (GVM), and light vehicles traveling on private roads. Businesses should also consider whether their use of auxiliary equipment powered by heavy vehicles qualifies under updated regulations.
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Calculating Your Fuel Tax Credit
Several factors influence the amount you can claim as part of your fuel tax credits. First, identify the type of fuel used and its corresponding fuel tax credit rate—rates are adjusted biannually in February and August based on the consumer price index (CPI). Next, assess how much of the fuel was used for eligible business activities.
Accurate record-keeping is essential for calculating claims effectively. Businesses should maintain detailed records such as receipts for taxable fuel purchases, logs documenting business use versus private purposes, and supporting documentation for auxiliary equipment usage. For claims below $10,000 annually, simplified record-keeping methods are available.
Maximizing Your Claim
Many businesses leave money on the table by failing to claim all their eligible fuel tax credits due to errors or omissions. Common mistakes include misclassifying business activities or failing to account for auxiliary equipment usage. To avoid these pitfalls:
Regularly review your business activities involving taxable fuel.
Use tools like the ATO’s eligibility calculator or consult professionals specializing in claiming fuel tax credits.
Ensure that your BAS accurately reflects all eligible claims.
ACT Tax Group offers tailored advice to help businesses optimize their claims while maintaining compliance with excise or customs duty regulations. By partnering with experts like us, businesses can save thousands annually by ensuring every eligible credit is claimed.
Recent Changes and Regulatory Updates
As of February 2025, updates to fuel tax credit rates reflect adjustments tied to CPI indexation. For example, liquid fuels used in heavy vehicles traveling on public roads now have a road user charge that affects claimable amounts. Similarly, rates for auxiliary equipment powered by heavy vehicles have increased slightly.
Businesses must stay informed about these changes to avoid errors during their BAS submissions. ACT Tax Group provides ongoing support to ensure compliance with evolving regulations while maximizing claims.
6 Steps for Claiming Your Fuel Tax Credits
Follow these steps to ensure your claims are accurate and comprehensive:
Verify Eligibility: Use tools provided by the ATO to confirm whether your business activities qualify.
Register: Ensure your business is registered for GST and fuel tax credits.
Maintain Records: Document purchases of taxable fuel and allocate usage between private purposes and business use.
Calculate Accurately: Use updated rates published by the ATO or automated tools like simplified fuel tax credits calculators.
Submit Claims Timely: Include your claims within your BAS submission during the relevant tax period.
Seek Professional Advice: ACT Tax Group specializes in auditing previous BAS submissions to identify missed opportunities.
Case Studies: Real-World Savings
A Canberra-based transport company saved over $20,000 annually by revisiting its records of diesel vehicle operations on private property with ACT Tax Group’s assistance. Similarly, a construction firm optimized its claims by accounting for auxiliary equipment powered by heavy vehicles—reducing operational costs significantly.
These examples highlight how proactive management of fuel tax credits can transform financial outcomes for businesses relying heavily on liquid fuels or gaseous fuels.
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Conclusion
Fuel tax credits offer Australian businesses a valuable opportunity to recover costs associated with taxable fuel used in eligible business activities such as operating heavy vehicles or auxiliary equipment. By understanding eligibility criteria, maintaining detailed records, and leveraging simplified methods where applicable, businesses can maximize their savings while remaining compliant.
Don’t leave money on the table—ensure you’re claiming all your available fuel tax credits today! ACT Bookkeeping’s friendly team is ready to assist you with expert advice tailored specifically for your needs.
