Are you looking to save more on your fuel costs for your machinery, plant, and equipment?
Fuel tax credits can be a great way to get some of that money back. However, many businesses don’t claim all the credits they are eligible for.
These credits can be claimed for a portion of the excise duty or customs duty included in the price of fuel you use to operate your machinery, plant or equipment.
This blog will explain how to claim extra fuel tax credits for your business in Australia.
We will also understand the steps, so you can make sure you’re getting every dollar you are eligible for.
Understanding Fuel Tax Credits
Fuel tax credits are a government initiative that allows businesses to claim a credit for the excise or customs duty included in the price of fuel used for specific activities.
These credits are designed to offset the fuel tax burden on businesses operating such as:
- Machinery
- Plant
- Equipment
- Heavy vehicles
- Light vehicles operating off-road or on private roads
Eligibility Fules And Activities
| Eligible Fuels | Eligible Activities |
|---|---|
| Diesel | Road Transport |
| Petrol | Agriculture |
| Kerosene | Fishing |
| Heating Oil | Forestry |
| Toluene | Mining |
| Fuel Oil | Construction |
| Transport LPG | Manufacturing |
| Transport LNG | Marine and Rail Transport |
| Transport CNG | Nursing and Medical |
| – | Burner Applications |
| – | Electricity Generation |
| – | Wholesale/Retail |
| – | Property Management |
| – | Landscaping |
*Subject to specific conditions based on vehicle type and usage.
Before claiming fuel tax credits, ensure your business meets the eligibility criteria:
- Eligible Business: Your business must be registered for Goods and Services Tax (GST) and fuel tax credits.
- Eligible Fuels: You can claim credits for taxable fuels, such as diesel, petrol, kerosene, heating oil, toluene, fuel oil, transport liquefied petroleum gas (LPG), transport liquefied natural gas (LNG), and transport compressed natural gas (CNG).
- Eligible Activities: Fuel tax credits can be claimed for fuel used in various business activities, including road transport (subject to specific conditions), agriculture, fishing, forestry, mining, construction, manufacturing, marine and rail transport, nursing and medical activities, burner applications, electricity generation, wholesaling/retailing, property management, and landscaping.
Activities And Fuels Not Eligible
It’s equally important to understand the activities and fuels that are not eligible for fuel tax credits.
These include:
- Fuel used in light vehicles with a Gross Vehicle Mass (GVM) of 4.5 tonnes or less travelling on public roads (e.g., cars, small vans, taxis)
- Gaseous fuels (LPG, LNG, CNG) used in heavy vehicles for travelling on public roads (however, credits can be claimed for gaseous fuels powering auxiliary equipment in heavy vehicles)
- Aviation fuels
- Alternative fuels that have already received a grant or subsidy
- Fuel acquired but not used due to loss, theft, or disposal
Activities That Earn You Credits - Knowing Where To Claim
Now comes the crucial part – understanding the business activities that qualify for fuel tax credit claims related to machinery, plant, and equipment.
Here’s a breakdown:
- Off-Road and Private Road Usage: Fuel used in machinery, plant, and equipment operating entirely off public roads or on private roads is generally eligible for fuel tax credits. This applies to industries like:
- Mining
- Construction
- Agriculture
- Forestry
- Manufacturing
- Road Transport with Heavy Vehicles: For heavy vehicles (Gross Vehicle Mass or GVM exceeding 4.5 tonnes) travelling on public roads, the scenario is slightly different. You can claim fuel tax credits, but the credit amount is reduced by the road user charge. However, fuel used in auxiliary equipment (like a mixer on a cement truck) qualifies for full credit, even on public roads.
- Non-Fuel Uses: Believe it or not, fuel used for purposes other than combustion can qualify. This includes:
- Direct use as a mould release agent in manufacturing.
- An ingredient in products not used as fuel (e.g., some cleaning solutions).
Activities That Disqualify Your Claim - Knowing What To Avoid
While many activities qualify, some do not. Be aware of these exclusions to avoid claim rejections:
- Light Vehicles on Public Roads: Fuel used in light vehicles (GVM 4.5 tonnes or less) travelling on public roads is not eligible. This includes cars, small vans, and taxis.
- Gaseous Fuels on Public Roads: Fuel tax credits for gaseous fuels used in heavy vehicles on public roads are typically zero due to the road user charge. However, these fuels can qualify for auxiliary equipment use.
- Aviation Fuels: Aviation gasoline and kerosene are not eligible.
- Alternative Fuels with Grants: Alternative fuels (e.g., ethanol, biodiesel) that have already received government grants or subsidies are excluded.
- Lost or Stolen Fuel: Fuel you haven’t used due to loss, theft, or disposal cannot be claimed.
Tools That Make Your Claim Process Easier
The ATO offers a variety of resources to simplify the claiming process:
- Fuel Tax Credit Rates and Eligible Fuels: This online resource provides up-to-date information on fuel tax credit rates for different fuel types and financial years. Crucial for accurate claim calculations.
- Fuel Tax Credit Eligibility Tool: An online tool that helps assess if your specific business activities qualify for fuel tax credit claims.
- Fuel Tax Credit Calculator: This handy online calculator helps determine the exact fuel tax credit amount you can claim based on the fuel type, quantity, and applicable rate.
- ATO App: Download the ATO app for easy access to the fuel tax credit calculator and other helpful resources, all on your mobile device.
Steps To Follow To Claim Extra Fuel Tax Credits
Here’s a simplified step-by-step procedure to maximise your fuel tax credit claims for machinery, plant, and equipment:
- Confirm Eligibility: Ensure your business is registered for GST and fuel tax credits with the ATO.
- Identify Eligible Activities: Determine the specific activities where you use machinery, plant, and equipment (off-road, private roads, heavy vehicles on public roads with auxiliary equipment, non-fuel uses).
- Maintain Records: Keep proper and accurate records of fuel purchases, usage per activity (with metre readings for machinery), and calculations based on fuel type, quantity, and applicable rate.
- Utilise ATO Resources: Use the ATO’s online tools like the fuel tax credit rates table, eligibility checker, and calculator to ensure accurate claim calculations.
- Claim on Your BAS: Submit your fuel tax credit claims when lodging your Business Activity Statement (BAS) with the ATO.
Remember: Claiming fuel tax credits can result in significant cost savings for your business. By understanding eligibility requirements, and qualifying activities, and utilising ATO resources, you can maximise the benefits and ensure a smooth claims process.
Require Expert Help To Claim Extra Fuel Tax Credits?
Understanding fuel tax credits can be confusing, especially for younger business owners. There are a lot of rules and regulations to follow, and it’s easy to miss out on the credits you deserve.
That’s where KPG Taxation comes in! Our team of expert accountants can help you understand the fuel tax credit system and ensure you are claiming everything you’re entitled to.
Our business accountants will help you figure out if your business qualifies, what activities are eligible, and how much you can claim. We can even help you keep track of your records and make sure your claims are filed correctly.
By taking advantage of fuel tax credits, you can save your business money on fuel costs. Let KPG Taxation help you maximise your fuel tax credit savings and keep more money in your pocket. Contact us today for a free consultation and learn how we can help!
