Reduce Your Business Expenses With Fuel Tax Credits
If you run a business and use fuel to run tools, machinery or vehicles for work, you might be able to get some of that money back. It’s called a fuel tax credit, and lots of business owners don’t even realise they’re eligible.
Fuel costs can add up fast, especially when you're working long hours on the tools or out on job sites. Claiming fuel tax credits is one simple way to reduce your tax bill and keep more money in your pocket.
What Are Fuel Tax Credits?
Fuel tax credits (FTC) are a refund for a portion of the tax you pay when you buy fuel. The government adds a tax (fuel excise or customs duty) to most types of fuel. But if you use that fuel for business purposes, for example, in machinery or vehicle use off public roads, you may be able to claim some of that tax back.
For example, if you buy diesel to run an excavator, a generator, or even a ute used off-road, you might be eligible to get a portion of that fuel cost refunded through your business activity statement (BAS).
Who Can Claim Fuel Tax Credits?
To claim fuel tax credits, you need to meet a few basic rules:
- You must have an Australian business number (ABN)
- You need to be registered for GST
- You must use fuel for eligible business purposes
- You can only claim fuel tax credits for eligible types of fuel. Most fuel types are eligible, including petrol, diesel, and LPG.
You can likely claim fuel tax credits if you use fuel in:
- Machinery and equipment: like excavators, bobcats, generators, compressors, and other tools that run on fuel.
- Vehicles used off public roads: for example, a ute or truck driven mainly on a job site, farm, or private property and private roads.
- Heavy vehicles: Vehicles with a gross vehicle mass (GVM) over 4.5 tonnes are eligible, even on public roads.
- Other business activities: like using a diesel generator to power your site or tools
Keep in mind: fuel used for private driving or in light vehicles on public roads (like your regular ute on the highway) usually can’t be claimed. But anything used off-road or in heavy machinery might be eligible.
How Much Can You Get Back By Claiming Fuel Tax Credits?
The amount you can claim depends on how you use the fuel and what type it is. The fuel tax credit rates change are indexed every February and August, in line with the consumer price index (CPI).
Fuel Tax Credit Rates from 3 February 2025 to 30 June 2025
*Auxiliary equipment can be powered by its own motor, a separate fuel tank or a Power Take-off Unit.
How to Claim Fuel Tax Credits
Claiming fuel tax credits is fairly straightforward if you’ve got your records in order. First, keep track of how much fuel you’re buying and how it’s being used — whether it’s for running machinery, equipment, or vehicles off-road. You’ll also want to note what type of fuel it is and keep receipts, logbooks, or any tracking you have to support your claim. Once you’ve worked out how much of that fuel use is eligible, you claim the credit when you lodge your Business Activity Statement (BAS). It's a good idea to chat to your accountant to make sure you’re doing it right and not missing any money you’re entitled to.
To claim FTCs, you need to be registered with the ATO. This can be done at the time of GST registration, or any other time by contacting the ATO directly or through your accountant.
Simplified fuel tax credits
If you claim less than $10,000 a year in fuel tax credits, the ATO lets you use simpler ways to work out your claim and keep records. These are designed to save time and paperwork.
Here are the key options:
- Use the rate at the end of your BAS period. If the fuel tax credit rate changes mid-period, just use the rate that applies on the last day of your BAS period. No need to split up your receipts.
- Work out litres based on dollars spent. If you know how much you spent on fuel, you can divide that amount by the average fuel price to work out how many litres you used. You'll need to determine the average price of fuel in your area.
- Simplified records. You can use things like bank statements or basic dockets as proof of fuel purchases, even if they don’t show exact litres.
If you drive heavy vehicles, there are extra options:
- You can use a basic method to estimate off-road use based on distance driven.
- If your vehicle is mainly used off-road (like a bobcat or harvester), you can usually claim all fuel without needing to split on/off-road travel.
- If your truck powers extra equipment (like a concrete barrel), the ATO provides set percentages to make calculating fuel use easier.
Common Mistakes to Avoid
Getting it wrong can cost you, either by missing out on money or attracting ATO attention. Here are a few traps to watch out for:
Claiming for ineligible vehicles
You can’t claim for regular utes or vans driven on public roads (unless they’re over 4.5 tonnes). A lot of people get caught out here.
Lack of records
If you don’t have a clear record of fuel usage, it’s hard to prove your claim.
Using old or wrong rates
Fuel tax credit rates change regularly. Make sure you’re using the correct rate for the date you bought the fuel.
Overestimating off-road use
If you’re guessing how much fuel was used off-road, make sure it’s a reasonable estimate — the ATO expects honest calculations.
A good rule of thumb: if you’re not sure, ask your accountant. Better to check than to over-claim and have to pay it back later.
We're Here to Help
Fuel tax credits are an easy way to reduce your business costs, but only if you’re eligible and know how to claim them properly. Whether you’re powering tools, running machinery, or driving heavy vehicles for work, it’s worth checking if you can get some of that fuel money back.
Reach out to us to determine your eligibility and make sure you're claiming everything you're entitled to — and stop leaving money on the table.
