Fuel Tax Credits Overview

Every litre of petrol or diesel your business buys has fuel excise built into the pump price. Fuel tax credits give some of that excise back for eligible business use - yet we regularly meet businesses running machinery, generators or heavy vehicles that have never claimed, and others claiming confidently on fuel that was never eligible.

Who can claim

To claim fuel tax credits you must be registered for GST, and registered for fuel tax credits with the ATO, and the fuel must be acquired for use in carrying on your business. Typical eligible uses include machinery and plant, off-road equipment, generators, and heavy vehicles travelling on public roads.

Some fuel is never claimable. The main exclusion trips up tradies constantly: fuel used in light vehicles of 4.5 tonnes gross vehicle mass or less travelling on public roads - the everyday ute or van - attracts no credit. Aviation fuels are also outside the scheme.

How the rates work

There is no single rate. The credit depends on the type of fuel and what you use it for, and the same tank of diesel can attract two different rates:

• Heavy vehicles on public roads get the excise rate reduced by the road user charge, so the net credit per litre is comparatively small.
• Off-road and auxiliary use - machinery, plant, equipment, and auxiliary equipment on a heavy vehicle such as a refrigeration unit or concrete agitator - generally attracts the full rate.

Rates are adjusted regularly in line with excise indexation, typically in February and August, so always check the current ATO figure before lodging rather than reusing last quarter's rate. The claim goes on your business activity statement at label 7D.

A worked example

Illustrative only: a civil contractor buys 2,000 litres of diesel in a quarter. Fuel records show 1,200 litres ran an excavator on a job site and 800 litres powered a tipper truck over 4.5 tonnes on public roads. The excavator litres are claimed at the full off-road rate, the truck litres at the lower on-road rate net of the road user charge - two calculations feeding one label on the BAS. Getting the split wrong in either direction means an overclaim or money left behind.

Records you need

The ATO expects records that show you acquired the fuel, paid for it, and used it in eligible activities: supplier invoices or fuel card statements, and a reasonable basis for apportioning litres between eligible and ineligible use, such as odometer readings, machine hours or fuel issue logs. Records must generally be kept for 5 years. Businesses claiming less than $10,000 in fuel tax credits a year can use simplified methods, including applying the rate that applies at the end of the BAS period - check the current ATO guidance for what the simplified approach allows.

When to get advice

Get advice before your first claim, when you buy heavy vehicles or significant plant, or if you want to claim back past periods - claims can generally be made within a set time limit, so a review of prior BAS periods is often worthwhile. We see this often: the entitlement is real, but the apportionment records are the part that decides whether a claim survives an ATO review.

Can I claim fuel tax credits for my work ute?

Generally no for road travel - fuel used in vehicles of 4.5 tonnes gross vehicle mass or less travelling on public roads is not eligible. Fuel the same ute uses to run eligible equipment off-road may be a different story, which is why usage records matter.

Can I claim for past periods I missed?

Often yes, within the applicable time limit for claiming, usually by amending or claiming on a later BAS. Check the current ATO rules and rates for each past period, since rates change during the year.

Where do fuel tax credits go on the BAS?

At label 7D on your business activity statement, which reduces the net amount payable. You need to be registered for both GST and fuel tax credits before you can claim.