Fuel tax credit rise to benefit thousands of Australian businesses

By Darryl Daisley - February 5, 2018

Tens of thousands of Australian businesses will be able to benefit from higher fuel tax credits, with the rate rising February 5 in line with inflation.

But Pitcher Partners Director of Customs, Fuel Tax and International Trade, Darryl Daisley, warns many businesses are not claiming credits properly, potentially missing out on entitlements.

Mr Daisley says the rules around who can claim fuel tax credits, under what circumstances, and at what rate are complex. Over many years of working with the fuel scheme, he’s never seen anyone successfully claim their full entitlement without help.

“Most people who buy fuel for business use potentially have the ability to get some of these credits back from the Australian Tax Office,” Mr Daisley says.

“The Federal fuel scheme covers tens of thousands of businesses, from small councils mowing verge lawns and reserves all the way up to the BHPs of the world.

“The problem is that it is increasingly complex to claim correctly.”

The scheme provides businesses with a credit for the fuel tax (excise or customs duty) that's included in the price of fuel used for machinery, plant, equipment and heavy vehicles.

Credits can also be claimed for light vehicles if they travel off public roads or on privately owned roads.

Heavy vehicles start at 4.5 tonnes gross, a weight that can capture many larger vans or light trucks. But even fuel used by light vehicles can be used in certain cases, such as road repair vehicles travelling on a road closed to the public or farm vehicles driving on properties.

“If you are involved in infrastructure, fishing, forestry or go off-road, it’s likely you will come under the fuel scheme at least part of the time,” Mr Daisley said.

“Occasionally you may need to apportion your use, if some of your equipment goes on-road and some goes off-road – and then apply the relevant rate.

“The issue for many businesses is that the rate changes that now occur twice a year and you must apply under the correct rate. It adds to the layers of complexity around claiming on your fuel.”

Yet the value of making a claim could be significant, Mr Daisley said, making it worth the trouble.

“In a mining and exploration sense, for example, fuel costs are 25-30 per cent of total operation costs – which means the credit can be the lifeblood for these business,” he says.

“You can claim up to four years in arrears, which is also useful if you think you have missed out on credits in the past. You just need to be aware that the rate changes, what the rate is and how you apply it to different businesses uses.

“This is a scheme that gets raised every couple of years politically but for many businesses, it’s vital.”

Fuel tax credit rates are indexed twice a year, in February and August, in line with the consumer price index. For the first time, they will rise for fuel acquired from 5 February 2018 (not 1 February as in previous years).

You can find a summary of the changes below or contact your Pitcher Partners expert for more information.

Eligible fuel type

Unit

Used in heavy vehicles for travelling on public roads

All other business uses (including to power auxiliary equipment of a heavy vehicle)

Liquid fuels, for example diesel or petrol

cents per litre

15.1

40.9

Blended fuels: B5, B20, E10

cents per litre

15.1

40.9

Liquefied petroleum gas (LPG) (duty paid)

cents per litre

0.0

13.3

Liquefied natural gas (LNG) or compressed natural gas (CNG) (duty paid)

cents per kilogram

0.0

28.0

Blended fuel: E85

cents per litre

0.0

10.725

B100

cents per litre

0.0

2.7

Source: ATO

Refer to ATO website for further information, or discuss with your Fuel Tax Advisor.


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