What are fuel tax credits?

Understanding the criteria for these rebates and effectively tracking fuel usage can help businesses optimise their claims. This article will explore how companies can access and maximise fuel tax credits to make fuel costs more manageable while navigating the complexities of the tax system in Australia.

What are fuel tax credits?

Fuel tax credits offer a rebate for businesses using fuel-powered equipment in Australia. These credits reduce the excise or customs duty on fuel expenses. To claim, companies must submit their Business Activity Statements (BAS) to the Australian Tax Office (ATO) for eligible fuel types, including blended fuels.

Which businesses can access the fuel tax rebate in Australia?

In Australia, various businesses can take advantage of the fuel tax rebate based on their operational use of fuel. Eligibility largely depends on the type of equipment used and where it operates:

• Machinery: This includes equipment like generators, excavators, tractors, and backhoes.
• Heavy vehicles: Vehicles used on public and private roads and those idling off-road may qualify. This includes vehicles using auxiliary equipment for air conditioning or refrigeration.
• Light vehicles: These vehicles must operate solely on private property or be stationary off public roads.

It's important to note that fuel used in light vehicles on public roads, heavy vehicles failing emissions standards, and aviation equipment does not qualify for the rebate. Additionally, businesses can’t claim rebates for fuel already accounted for, misused, or taken unlawfully.

What is the fuel tax credit rate?

Fuel tax credit rates vary based on the type of fuel, where it is used, and the date it was purchased. The Australian Taxation Office (ATO) updates these rates every six months, leading to slight differences from previously published figures. As of December 2022, the rates are outlined below:

The Fuel Tax Credit rate is not a fixed figure but a variable one that depends on several factors. These include the type of fuel being used, the location where it's being used (on public roads or off-road), and the date of purchase. The ATO regularly updates these rates, typically every six months, which can result in slight deviations from previously published figures.

As of December 2022, the rates are as follows: for petrol, diesel, and some other liquefied fuels, as well as blended fuels like B5, B20, and E10, the rate is 18.846 cents per liter for heavy vehicles on public roads. The off-road rate for these fuels needs to be specified in the provided data. For blended fuel E85, the rate is 0.019735 cents per litre, while for LPG, it's 0.015 cents per litre. LNG and CNG have a rate of 0.0315 cents per kilogram. Lastly, B100 fuel has a rate of 0.0107 cents per liter.

The Off-Road Rate applies to heavy and light vehicles not on public roads, as well as operational machinery and auxiliary equipment.

Calculating these credits can be complex for businesses, especially when distinguishing between fuel use on and off public roads.

Many businesses simplify the process by applying a standard percentage to all vehicles, potentially missing out on higher claims they may qualify for. To avoid this issue, implementing telematics technology is recommended. It offers detailed tracking of vehicle and equipment movements, ensuring accurate reporting for fuel tax credit claims.

Some businesses default to the lowest available rate for ease of calculation. This method, while straightforward, may lead to significant lost reimbursements. Investment in software that links with fuel tax credit calculators could yield considerable returns.

The ATO defines a public road as any accessible way to the general public. Therefore, off-road locations are those not available for public use. Common examples of off-road settings include:

• Mining sites and quarries
• Agricultural fields and processing plants
• Loading docks and ports
• Construction sites
• Roads and structures being built
• Forestry and logging areas
• Council waste sites
• Private properties, such as warehouses and depots

Using this understanding of public and off-road definitions helps businesses maximise their fuel tax credits. By recognising the different rates and tracking fuel usage accurately, they can ensure that they fully benefit from available rebates, aligning with the regulations put forth by the ATO.

How can businesses submit retrospective off-road FTC rebate claims?

Businesses that have not fully claimed their eligible Fuel Tax Credits (FTC) might consider filing a retrospective claim for up to four years’ rebates. This applies to both on-road and off-road fuel usage.

To successfully file a retrospective off-road FTC claim, businesses must gather important information, including:

• Type of fuel used
• Quantity of fuel consumed
• Proportion of on-road versus off-road activity

This data must be detailed for each piece of equipment involved in the claim.

In cases where businesses struggle to gather complete fuel records from the past four years, they may utilise telematics software. This technology can help establish a consistent usage pattern that supports the data needed for the retrospective FTC claim.

It is important to note that while many businesses have not claimed their full rebates, filing for those who have not previously received any FTC rebate is a rare occurrence.

How can businesses get help tracking fuel usage for the fuel tax credit?

For businesses looking to maximise their Fuel Tax Credit (FTC) claims, effective tracking of fuel usage is essential. Various tools and software can assist in monitoring fuel consumption, ensuring compliance, and accurately capturing the necessary data to support claims.

FTC management software

FTC management software is specifically designed to help businesses track both their equipment and fuel usage. This technology provides clarity on how much fuel is being consumed for on-road and off-road activities. By using this software, companies can gather the required information to accurately claim the full amount of fuel tax credits they are entitled to receive.

Fuel tax credit explained

The Fuel Tax Credit is a form of refund that businesses can claim for excise paid on taxable fuel used in their operations. This rebate can cover full or partial refunds, making it essential for businesses to understand the specifics of their fuel usage. The ATO offers public rulings that clarify the tax law provisions applicable to various types of businesses and their fuel consumption.

Importance of accurate tracking

Accurate fuel usage tracking benefits businesses by ensuring they claim the right amount and reducing the risk of discrepancies during audits. Businesses that track their fuel consumption effectively can receive a fair and reasonable apportionment for the fuel used in auxiliary equipment on heavy vehicles, as per the ATO’s guidelines. These guidelines can help organisations maximise their FTC claims.

Utilising technology

Various technological solutions are available to assist with fuel tracking:

• GPS telematics: High-definition GPS devices can be fitted to vehicles to collect real-time data on fuel usage. This information is transmitted through a cellular network, ensuring accuracy.
• Fuel tax credit calculator: Businesses can use an FTC calculator to determine the rates and amounts they may claim based on actual fuel consumption. This tool simplifies the calculation process, providing immediate access to potential entitlements.
• Eligibility tool: Before applying for the FTC, businesses can utilise eligibility tools offered by the ATO and other resources to confirm their qualification. Understanding eligibility criteria is crucial to ensure compliance and avoid claim denials.

Types of fuel usage

When tracking fuel, it is important to classify its use correctly. Fuel can be used in various capacities, including:

• On-road travel: This includes all activities on public roads, such as national and state highways. The current FTC rate for fuel used on-road is calculated by subtracting the Road User Charge (RUC) from the total excise payable.
• Off-road travel: Businesses using fuel for activities away from public roads, such as construction sites or private properties, are eligible for a different FTC rate. As of December 2022, this rate is set at 46.0 cents per litre.
• Auxiliary equipment: Heavy vehicles often use fuel for tasks that are unrelated to propulsion. Examples include concrete mixers, refrigerated trucks, and garbage trucks. The fuel used for these operations can also be tracked for FTC claims.

Claiming fuel tax credits

To effectively claim fuel tax credits, businesses should follow these steps:

1. Install tracking technology: Use fuel monitoring systems that provide detailed reports on fuel consumption related to specific activities and equipment.
2. Recordkeeping: Maintain thorough records of fuel use, including dates, amounts, and purpose. This documentation will support claim submissions.
3. Calculate entitlements: Utilise fuel tax credit calculators to determine the exact amount of refund due for each fuel type used during the specified timeframe.
4. Submit applications: After compiling all the necessary information and calculations, businesses should submit their claims to the ATO in a timely manner to avoid missing deadlines.
5. Review and Audit: Regularly review fuel usage practices and perform internal audits to ensure compliance with ATO requirements. Address any discrepancies promptly to maintain eligibility.

How Thriday can help improve efficiency in recordkeeping?

By implementing the right technology and processes, businesses can efficiently track their fuel usage, ensuring they maximise their Fuel Tax Credit claims while remaining compliant with relevant tax laws. Using tools such as the fuel tax credit calculator or the eligibility tool can be particularly beneficial in facilitating a smooth claims process. Taking advantage of these resources and maintaining accurate records is key to optimising potential rebates.

For businesses seeking a comprehensive solution, Thriday offers a powerful platform that streamlines the entire Fuel Tax Credit claim process. Thriday goes beyond basic tracking and calculations by:

• Providing detailed reporting: Thriday generates comprehensive reports that break down your fuel usage and FTC claims, making it easy to identify areas for improvement and ensure compliance.
• Offering expert support: Thriday's team of experts are available to answer your questions and provide guidance on maximising your FTC claims.

By automating tedious tasks and providing valuable insights, Thriday empowers businesses to take control of their Fuel Tax Credits and improve their bottom line.

Frequently Asked Questions

Who can apply for fuel tax credits in Australia?

Fuel tax credits are available to a wide range of businesses that use fuel for their operations. This includes operators of heavy vehicles over 4.5 tonnes and those using fuel for equipment and machinery. To be eligible, businesses must also be registered for GST.

How does one determine their fuel tax credits?

Calculating fuel tax credits involves considering several factors, including the type of fuel used, the activities performed with that fuel, and when the fuel was acquired. Many businesses find it helpful to use the fuel tax credit calculator provided by the Australian Taxation Office to ensure accurate claims.

What are the current fuel tax credit rates?

The rates for fuel tax credits can change, so it is vital to check the latest information. The Australian Taxation Office updates these rates regularly, typically every few months, based on government policies and market conditions.

What is the role of the Australian Taxation Office in fuel tax credits?

The Australian Taxation Office manages the fuel tax credit scheme. It provides information, guidelines, and tools to help businesses understand their entitlements and ensure compliant claims.

How should fuel tax credits be accounted for during tax filing?

When filing taxes, fuel tax credits should be reported correctly. Businesses typically include them in the Business Activity Statement (BAS) by completing the appropriate section. It is important to keep accurate records of fuel purchases and the calculations used to determine credit amounts.

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