Fuel tax credits

Claiming for fuel use

Need to be registered

Fuel for vehicles and machinery is already taxed (via an excise duty) when you buy it, so what the law provides is a credit that will allow businesses to claim back the tax that has already been 'paid' on that fuel.

The fuel tax credit scheme allows businesses that use fuel in the course of carrying on business to claim a tax credit via their activity statement, in much the same way that other indirect taxes are claimed such as GST.

Generally, necessary business expenses that are made to produce assessable income are available as tax claims. The petrol that powers your car or truck is no different.

If you use fuel in your business, such as to drive machinery, plant, equipment and vehicles, then you will probably be able to claim a fuel tax credit.

Alternative fuels such as LPG, ethanol or aviation fuel are excluded for now (but see the following paragraphs), as are most light vehicles (of less than 4.5 tonnes on public roads). But the fuel used needs to have had excise or customs duty paid on it, which would include for example petrol, diesel, kerosene, heating oil, toluene and fuel oil.

Alternative fuels, namely the biofuels ethanol and biodiesel, and the gaseous fuels including liquefied petroleum gas (LPG), liquefied natural gas (LNG) and compressed natural gas (CNG), will be brought fully into the tax system, which started with a gradual phasing in from July 1, 2011.

• high (energy content greater than 30 megajoules per litre, or per cubic metre in the case of compressed natural gas);
• medium (between 20 and 30 megajoules per litre), or
• low (less than 20 megajoules per litre).

Alternative fuels will benefit from a 50% reduction of full energy content tax rate. The effective tax will be phased in from July 1, 2011 until July 1, 2015. There will be an offsetting grant payment to domestic ethanol producers that will be progressively reduced to zero by July 1, 2015. There will be no offsetting grants for excise-equivalent customs duty, which will also be phased in over the same period.

Need to be registered
To make claims, you'll need to be registered for GST, registered for fuel tax credits, and be undertaking an eligible activity and meet environmental criteria. The fuel tax period will be the same as your GST tax period, and there is a four year time limit on claiming fuel tax credits after July 1, 2010 (although you can claim in the current BAS, and not have to revise the corresponding period's reports).

Heavy diesel vehicles might have to meet emission standards. And there are limited situations where being registered for GST isn't required, like a householder needing to run a generator for electricity, or a non-profit body operating an emergency vehicle.

Once registered, the Tax Office will add another label to your business activity statement form. You'll need to keep the usual records that show the activities your business undertakes, but include any fuel use records as well. When it's time to do your BAS, work out how much fuel you've used, apply the correct rate, and multiply them to see how much you can claim.

An individual fuel user, not registered for GST, can still make a claim if generating electricity for domestic use, but will have to still be registered for fuel tax credits. Domestic use means for a house or cabin, a relocatable home, houseboat or caravan, but they must be a person's 'permanent place of residence' (so not a yacht or vacationing caravan).

Updated July 18, 2011

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