The cost of fuel is rising all around the world. With the ongoing pressure on fuel prices, you should take advantage of the fuel tax credit.

We understand that as a business owner, you should save every dollar, which is crucial for the success of your business. In this article, we intend to give you a brief overview of fuel tax credit so that you can get the maximum benefit for your business.

What is the fuel tax credit?

As the name suggests, the fuel tax credit is a scheme where you can claim back the taxes imposed on fuel used in your business process.

Australia imports fuel from other nations. As a result, excise duty or a customs duty is imposed on the fuel. The government has taken measures to give a credit on the taxes on fuel for certain businesses.

However, there are certain exemptions and several criteria that you must fulfill to claim the fuel tax credit.

How to check the eligibility for the fuel tax credit

As mentioned before, there are specific criteria that you must fulfill to be eligible for the fuel tax credit. The eligibility for the fuel tax credit depends on the type of business, the type of fuel you use, and the nature of the activity for which you use such fuel.

What type of businesses are eligible for the fuel tax credit

Before claiming the tax credit, your business must be registered for Goods and Services Tax (GST) and the fuel tax credit.

Therefore most businesses will be eligible for this scheme as long as they are registered accordingly.

What types of fuels are accepted for the tax credit scheme

Registering the business for GST and fuel tax credit alone is not sufficient. You must use an accepted fuel.

Any taxable fuel you acquired, imported, or manufactured is accepted in the scheme. The taxable fuels generally should include excise duty or customs duty imposed on them. Therefore the taxable fuels eligible for a tax credit are as follows.

  • Petrol
  • Diesel
  • Kerosene
  • Fuel oil
  • Toluene
  • Heating oil
  • Transport liquefied natural gas (LNG)
  • Transport compressed natural gas (CNG)
  • Transport liquefied petroleum gas (LPG)

What kind of activities are accepted in the scheme

With the first two criteria, you should also use the fuel for accepted activities to claim the fuel tax credit. Not all activities are accepted in the scheme. Therefore, if you plan to apply for a tax credit, make sure that you use the fuel for the following activities or reasons.

  • Diesel vehicles purchased before 1st July 2006 with a gross vehicle mass (GVM) equal to or greater than 4.5 tonnes traveling on public roads.
  • Vehicles with a (GVM) greater than 4.5 tonnes travelling on public roads.
  • Can claim the fuel used for agriculture, forestry, fishing, mining, landscaping, property management, etc.
  • Fuel used in generators at commercial plants, stationary or portable generators. (This scheme is also applicable for some domestic electricity generations: ATO)

These are only a few of the accepted activities that the Australian Taxation Office (ATO) mentioned. You can visit the ATO’s website for more details on the activities accepted for the fuel tax credit.

ATO has also introduced a simple tool to check the eligibility for the fuel tax credit scheme. Check it out if you plan to apply for the fuel tax credit by yourself.

What are the exemptions to claiming the fuel tax credit?

As you have noticed, not every business, fuel, or activity is accepted in the scheme. These activities and fuels are not accepted under the fuel tax credit scheme.

  • Fuels used in light vehicles with a GVM of 4.5 tonnes or less traveling on public roads, for example, small van, a car, or taxi.
  • Gaseous fuels used in heavy vehicles which travel on public roads. (But, you can claim for gaseous fuels that power other supporting equipment in heavy vehicles.)
  • Fuel you acquired but have not used because it was lost, stolen, or disposed.
  • Aviation fuels.
  • Some alternative fuels that have already received a grant or subsidy.

How can you claim the tax credit?

You can only claim the fuel tax credit by submitting a Business Activity Statement (BAS), and it cannot be claimed against your annual GST return.

You have to assess your eligibility and calculate the due tax credit amount yourself. You have to submit the relevant BAS before the deadline and indicate the fuel tax credit under a separate label as recommended by the ATO.

ATO advises to keep all the supporting documents and receipts to prove your claim if required.

You should also keep in mind that you must claim the fuel tax credit within four years. The four-year count down starts from the day you should submit the BAS for the taxation period in which you obtained the fuel.

The ATO keeps on changing the fuel tax credit rates from time to time. It is better to check the relevant rates from the ATO website if you are calculating the tax credit by yourself.

ATO has also introduced a credit calculator so that you can calculate your tax credit easily.

Do you need to consult a tax agent?

Hiring a tax agent to claim the fuel tax credit is not a legal requirement. However, you must consider various factors when preparing the BAS and to claim the tax credits.

You should be familiar with the rates and standard requirements of the BAS to claim the credits accurately. A registered BAS or tax agent can help you to manage it more efficiently.

SPS consultants is a certified tax agent body that has helped hundreds of clients. Our expert team is highly updated about the changing tax rates, laws, and obligations. Hence we can help you get the maximum benefit from the tax credit scheme. If you are looking for a certified tax agent you could trust in the industry, please don’t hesitate to contact us today.