Business · Tax
What Are Fuel Tax Credits?
Written by Emma Greenhill
Fuel tax credits let businesses claim back a portion of the excise or customs duty on fuel used in certain business activities. This could mean a significant saving, so it’s important to know how to take advantage of it.
If you’re using fuel in vehicles, machinery, or off-road activities (like agriculture, construction, or transport), you might be eligible to claim back a portion of the fuel tax.
Who Can Claim Them?
If your business uses fuel for:
- On-road vehicles (e.g., delivery trucks, vans, or freight transport)
- Off-road activities (e.g., farming, mining, construction machinery)
- Power generation (e.g., for your business operations)
…you could be eligible for fuel tax credits. However, fuel used for private or non-business purposes doesn’t count.
How Do Fuel Tax Credits Work?
The amount of credit you can claim depends on several factors, including:
- Fuel type: Diesel, petrol, or even LPG. Different rates apply.
- Usage: Fuel used for off-road or non-road activities usually qualifies for a higher credit.
- Business activity: Agricultural and mining businesses, for example, have different rates than freight or construction.
The more fuel your business uses in eligible activities, the more credits you can claim. Keep track of how much fuel you use, and you can claim a refund when lodging your Business Activity Statement (BAS).
How to Claim Fuel Tax Credits
- Register with the ATO: If you're registered for GST, you're probably already set up for fuel tax credits.
- Keep good records: Log fuel purchases, quantities, and how they’re used in your business.
- Check the ATO’s current rates: Fuel tax credit rates are updated regularly, so make sure you're using the right one.
- Lodge with your BAS: Include your fuel tax credit claim when submitting your BAS.
Simple as that—claiming is done on your BAS, usually every quarter.
Rising Fuel Prices and Fuel Tax Credits: What Businesses Need to Know
FTCs are fixed per litre by the ATO and don’t rise with fuel prices. That means when pump prices surge, businesses pay more out of pocket, while the credit does not change.
For example, a 25¢/L credit offsets only a fraction of rising fuel costs, increasing operational expenses for fuel-heavy industries like transport, agriculture, and mining.
It is also important to note that the credit is directly linked to the excise, or tax on fuel. When the government recently reduced the excise to curb fuel price increases, the FTC rates moved accordingly.
The takeaway:
FTCs provide relief, but they can’t fully shield businesses from price spikes. However, tracking fuel use and claims carefully is essential to managing costs in today’s volatile market.
Not sure what you can claim?
Our team can help you check your eligibility, set up your records, and get your fuel tax credit claims right on every BAS.
Talk to YBMFrequently Asked Questions
Fuel tax credits let businesses claim back a portion of the excise or customs duty on fuel used in certain business activities. If you use fuel in vehicles, machinery, or off-road activities like agriculture, construction, or transport, you may be eligible to claim back a portion of the fuel tax.
You could be eligible if your business uses fuel for on-road vehicles such as delivery trucks, vans or freight transport; off-road activities such as farming, mining or construction machinery; or power generation for your business operations. Fuel used for private or non-business purposes doesn’t count.
The amount you can claim depends on the fuel type (diesel, petrol or LPG, which attract different rates), the usage (off-road or non-road activities usually qualify for a higher credit), and your business activity (agriculture and mining, for example, have different rates than freight or construction). The more fuel you use in eligible activities, the more credits you can claim, and you claim a refund when lodging your Business Activity Statement (BAS).
Register with the ATO (if you’re registered for GST you’re probably already set up), keep good records of fuel purchases, quantities and how they’re used, check the ATO’s current rates as they are updated regularly, and lodge your claim with your BAS, usually every quarter.
No. Fuel tax credits are fixed per litre by the ATO and don’t rise with fuel prices, so when pump prices surge businesses pay more out of pocket while the credit does not change. The credit is directly linked to the fuel excise, so when the government reduces the excise, the fuel tax credit rates move accordingly.