How to Register for Fuel Tax Credits for Your Australian Business

What are fuel tax credits?

Fuel tax credits allow eligible businesses to claim a credit for the fuel tax, meaning excise or customs duty, included in the price of fuel used in eligible business activities.

The amount you can claim depends on the fuel you use, the activity in which you use it and when you acquired the fuel. Fuel tax credit rates change regularly, so registration does not create one fixed credit rate for all of your fuel.

Who can register for fuel tax credits?

For ordinary business claims, you need to be carrying on an enterprise and acquiring, manufacturing or importing taxable fuel for an eligible use. You must also be registered for GST when you acquire or import the fuel for which the credit is claimed.

Fuel tax credit registration is separate from GST registration. If your business is not yet registered for GST, complete that requirement before registering for fuel tax credits. See the separate guide to registering your business for GST.

If you are starting a business and do not yet have an Australian Business Number, see how to apply for an ABN.

Which fuel and business uses are eligible?

To qualify, the fuel must generally be taxable fuel, meaning fuel tax has been paid on it, and it must be acquired, manufactured or imported for use in carrying on your enterprise.

Eligible uses can include fuel used in machinery, plant and equipment and eligible vehicles, but the applicable rate and entitlement depend on the exact activity.

The ATO provides a fuel tax credit eligibility tool to check whether your particular fuel and activity qualify. Checking the activity is important because buying fuel for a business does not automatically make every litre eligible.

Which fuel uses are not eligible?

Some important exclusions apply. The ATO identifies the following among the fuels or activities that are not eligible:

• fuel used in a light vehicle of 4.5 tonnes gross vehicle mass or less while travelling on a public road
• aviation fuels
• some alternative fuels or activities involving alternative fuels.

Alternative fuel rules can depend on the particular fuel and activity, so the ATO eligibility tool should be used rather than assuming that all alternative fuels are excluded.

What about heavy vehicles on public roads?

Fuel used for travel on public roads in vehicles with a gross vehicle mass above 4.5 tonnes can qualify, subject to the fuel tax credit rules. However, the amount is reduced by the road user charge.

If the same vehicle also uses fuel off public roads or in auxiliary equipment, different rates may apply to different portions of the fuel. The business must use a fair and reasonable method where apportionment between eligible uses or rates is required.

How do you register for fuel tax credits online?

The ATO allows businesses to register through Online services for business. The official steps are:

1. Sign in to Online services for business.
2. Select Profile.
3. Select Tax registrations.
4. Select Add.
5. Select Fuel tax credits and complete all mandatory fields.
6. Select Next.
7. Review the information shown.
8. Sign the declaration by ticking the declaration box and submit the registration.

The ATO also allows fuel tax credit registration through a registered tax agent or BAS agent, by phone, or through its automated self-help service.

Is fuel tax credit registration the same as GST registration?

No. They are separate tax registrations. You need GST registration as well as fuel tax credit registration to make ordinary business fuel tax credit claims.

Fuel tax credits also should not be confused with PAYG withholding. PAYG withholding applies when an employer or other payer is required to withhold amounts from certain payments. If you are preparing to pay employees, see the separate procedure for registering for PAYG withholding.

How do you calculate your fuel tax credit?

Registration does not determine the amount of your future claims. The credit depends on the relevant fuel tax credit rate, the quantity of eligible fuel and how that fuel was used.

Fuel tax credit rates change regularly. The ATO recommends using its fuel tax credit calculator, which can calculate the amount to report on your BAS and adjustments relating to earlier BAS periods.

For fuel used in more than one way, you may need to apportion the fuel between eligible and ineligible uses or between uses that attract different rates. Any apportionment method must be fair and reasonable for your circumstances.

How do you claim fuel tax credits after registering?

Once registered and entitled to a credit, you claim fuel tax credits through your business activity statement at label 7D. Label 7C is used when you need to decrease an entitlement that you previously claimed.

Generally, if you account for GST on a cash basis, you claim the fuel tax credit in the BAS period in which you pay for the fuel. If you account on a non-cash basis, you generally claim it in the BAS period in which you receive the invoice for the fuel.

The ATO's calculator can help determine the amount to enter rather than relying on an old rate, because the rate applicable to the fuel may have changed.

What if you forgot to claim eligible fuel?

Failing to claim an eligible fuel tax credit on an earlier BAS does not necessarily mean it is lost immediately. The ATO allows an unclaimed entitlement to be included on a current activity statement if it is still within the applicable 4-year credit time limit.

The four-year period starts the day after the lodgment due date of the first BAS for the tax period in which you could have claimed the credit and ends four years after that date. When claiming fuel from an earlier period, calculate the credit using the rate that applied when you acquired the fuel.

What records should your business keep?

Your records need to support the fuel acquired and the calculation of the credit. Depending on your activities, relevant records can include purchase records, quantities of fuel, vehicle or equipment use and calculations showing how eligible and ineligible use was apportioned.

Fuel tax records relevant to an entitlement generally need to be retained for at least 5 years after the completion of the transactions or acts to which they relate. Records must enable the fuel tax credit entitlement to be determined.

Keeping the records from the beginning of the activity is particularly important when one fuel purchase is used across different vehicles, equipment or on-road and off-road activities.

What should you check before registering?

Confirm three things before completing the registration: that you are registered for GST, that the fuel is taxable and eligible, and that the activity in which you use it qualifies.

A common mistake is assuming that ordinary fuel used in any business vehicle qualifies. Fuel used in a light vehicle of 4.5 tonnes GVM or less while travelling on a public road is specifically excluded, even when the trip is for business.

If your business details later change, keep your Australian Business Register information current. The procedure for updating ABN details explains the process for changes such as a business address.