Are you struggling with high fuel costs in your business? Fuel tax credit provides relief by refunding the fuel tax included in your fuel purchases. Many companies fail to claim these credits due to a lack of awareness. The fuel you use can significantly impact your business expenses. Fuel tax credits offer a practical solution, providing a credit for the fuel tax paid. This reduces your overall operating costs. This article provides a complete guide to fuel tax credits, including eligibility, calculating credits, and claiming processes.

What are Fuel Tax Credits?

Fuel tax credits provide a rebate for the excise included in the fuel price. Businesses using fuel for eligible activities can claim fuel tax credits through the Australian Taxation Office (ATO). The credits help reduce the cost of fuel used in business activities, including heavy vehicles on public roads. The Business Activity Statement (BAS) is used to claim these credits. Fuel tax credit rates vary based on the type of fuel and its usage. Both light and heavy vehicles used in business can benefit from these credits.

Types of Fuels Eligible for Credits:

  • Diesel: Eligible when used in heavy vehicles on public roads or for business activities off-road.
  • Petrol: Eligible for business activities, excluding light vehicles travelling on public roads.
  • Biodiesel: Eligible for business use, offering an alternative to conventional diesel.
  • LPG (Liquefied Petroleum Gas): Used in forklifts or other business equipment.
  • LNG (Liquefied Natural Gas): Eligible for off-road business activities.
  • Ethanol: Used in heavy vehicles and specific business activities.
  • Aviation Fuel: Used in aviation for business purposes.
  • Fuel Blends: Mixed fuels can be eligible, depending on their composition and usage.

How Does It Benefit Businesses?

Businesses benefit by reducing their fuel costs through credits for the fuel tax. This helps lower operating expenses, especially for heavy vehicles and off-road activities.

Eligibility Criteria

Fuel tax credits provide businesses with a credit for the fuel tax included in the price of fuel used in your business. Eligibility to claim fuel tax credits requires meeting specific criteria. Businesses must be registered for both GST and fuel tax credits with the tax office. The fuel must be used in eligible activities, such as heavy vehicles over 4.5 tonnes gross vehicle mass or for certain equipment and machinery.

The type of fuel also matters; diesel fuel, gaseous fuels, and fuels for specific business uses qualify. The Fuel Tax Act 2006 outlines these conditions, and businesses must keep accurate records of fuel purchases and usage to support their claims.

Who Can Claim Fuel Tax Credits?

Businesses able to claim fuel tax credits include those using fuel for commercial purposes. Heavy vehicles manufactured on or after 1 January 1996, or retrofitted with an engine meeting environmental criteria, qualify. Organizations involved in agriculture, mining, marine transport, and other eligible activities can claim credits for the fuel used.

To claim, you must lodge your claim during the BAS period, ensuring you satisfy one or more of the outlined criteria. Regularly check the rates each time you lodge a claim, as they may change.

Calculating Your Fuel Tax Credit

Methods to Determine Fuel Tax Credit Rates:

To calculate your fuel tax credit, check the current rates on the ATO or department websites. These rates vary based on the type of fuel and its usage. Using an online calculator from ATO can simplify this process, providing accurate calculations based on your specific circumstances. Ensure you use the latest rates and guidelines.

Calculate Your Fuel Tax Credits:

Use the following formula to calculate your fuel tax credits:

Fuel Tax Credit Amount = Total Fuel Purchased × Applicable Fuel Tax Credit Rate

Ensure all fuel purchases are recorded accurately and the correct rates are applied.

Common Errors to Avoid in Calculations:

  • Incorrectly recording fuel purchases
  • Using outdated fuel tax credit rates
  • Failing to register for GST and fuel tax credits
  • Misclassifying the type of fuel used
  • Neglecting to lodge claims within the BAS period

Claiming Your Fuel Tax Credits

Fuel tax credits provide businesses with a credit for the fuel tax included in the price of fuel used in your business. To claim your fuel tax credits, the following documentation is necessary:

  • Records of fuel purchases: Keep records of the type of fuel and amount purchased.
  • Business use of fuel: Document the activity you use the fuel for, such as in motor vehicles or machinery.
  • Invoices: Maintain invoices that show the fuel tax included in the price.
  • Bas period records: Store records for the relevant Business Activity Statement (BAS) period.
  • Maintenance schedule: Include audited maintenance programs and accreditation details if applicable.
  • Guidelines on environmental criteria: Ensure vehicles meet the environmental criteria as per guidelines.

Submission Process for Fuel Tax Credit Claims:

  1. Register for GST: Ensure your business is registered for GST. If not then register for GST for free and streamline your tax management with TaxLeopard.
  2. Calculate fuel tax credits: Use tools like the ATO’s calculator to simplify the calculation.
  3. Lodge a BAS: Submit your Business Activity Statement (BAS) to claim the credits.
  4. Maintain accurate records: Keep thorough records as required by the tax office.
  5. Check for updates: Regularly check the rates each time you lodge a claim to ensure accuracy.

Current Fuel Tax Credit Rates

As of now, the fuel tax credit rates are as follows: For heavy vehicles over 4.5 tonnes of gross vehicle mass, the rate is 16.9 cents per litre. For other business activities, the rate is 43.3 cents per litre. It is advisable to check the ATO website frequently to stay updated on any changes to these rates, as they may be subject to revision.

Factors Affecting Fuel Tax Credit Rates:

Several factors impact fuel tax credit rates. The fuel type, such as diesel or gaseous fuels, influences the rate. Environmental criteria apply to diesel fuel, affecting eligibility. Vehicles manufactured on or after 1 January 1996 and those retrofitted with an engine must meet specific emission standards. Moreover, the amount of fuel tax credit depends on accurate record-keeping and adherence to the guidelines on the environmental criteria set by the Department of Infrastructure and Regional Development.

Conclusion

Fuel Tax Credits can significantly benefit businesses by providing a credit for the tax included in fuel prices. Understanding eligibility and how to claim these credits is essential. Keeping thorough records and checking the current rates ensures you receive the correct amount. Make sure your vehicles meet the necessary environmental criteria. This will maximize your benefits. The correct documentation simplifies the claiming process, reducing potential issues. Have you reviewed your fuel tax credit claims to ensure maximum savings for your business?

FAQs

1. Can I claim for all types of fuel?

Only certain fuels like diesel, gasoline, and gaseous fuels used in business are eligible.

2. When did fuel tax credits start?

Fuel tax credits have been available since 1 July 2006.

3. Do I need to keep records?

Yes, maintaining accurate records of fuel purchases and usage is essential.

4. Where can I find more information?

Visit the ATO website or business.gov.au for detailed guidelines.