What are Fuel Tax Credits?

Fuel tax credits are available to businesses that use fuel to operate machinery, plant equipment, heavy vehicles and light vehicles travelling off public roads.

The fuel tax credit is designed to credit businesses for the ‘fuel tax’ (excise or customs duty) included in the price of fuel.

To be eligible to make a claim, your business must be registered for GST and Fuel Tax Credits. The eligibility is quite strict, so if you’re unsure if your business activities qualify, please get in touch with us for advice.

How to calculate the credit

Since the BAS period ending 31 March 2016, the ATO has simplified the way fuel tax credits are recorded and calculated for businesses that claim less than $10,000 in fuel tax credits each year. The simplifications means that you can now use either of the following two calculation methods.

Use one rate in BAS period: Fuel tax credit rates tend to change regularly. This method saves you the need to use multiple rates within a BAS period by using the rate that applies at the end of the period. To work out your claim, total your litres for the period and use the rate that is current on the last day of the BAS period.

Work out your litres: For this method, take the total cost of fuel purchased in the BAS period and divide it by the average price of fuel per litre for that period. Once you have the total litres for the BAS period, you can calculate your claim using the ATO’s fuel tax credit calculator.

Supporting documents

It is important that all claims be supported with documentation that shows that the quantity of fuel claimed was used in your business. The ATO accepts contractor statements, financial institution business credit/debit account statements, financial institution personal credit/debit account statements, point-of-sale docket and fuel supplier statements or invoices. The supporting records need to be retained for five years.

Reach out to us at Platinum Accounting if you need assistance with BAS preparation. We specialise in small business accounting and we are here to help you 03 9746 6479.