By Andrew Hayes, Director, Westlawn Business Services
Does your business use fuel in machinery, plant, equipment or vehicles? If so, are you claiming the maximum fuel tax credit available?
Most fuels used in business are eligible for fuel tax credits, but many businesses miss out on this significant revenue source. Fuel tax credits effectively offset the fuel tax included in the price your business pays for fuel.
The credit is also available to homeowners who use fuel to generate domestic electricity and non-profit organisations operating emergency vehicles or vessels.
While most fuels used in business are eligible for fuel tax credits, some are not. Fuels that are not eligible for tax credits include:
Fuel used in vehicles of 4.5 tonne gross vehicle mass (GVM) or less that travel on a public road (GVM is the maximum weight a vehicle can carry, including its own weight)
Aviation fuels; and
Alternative fuels such as liquefied petroleum or natural gas, ethanol and biodiesel.
How much can you claim?
The formula for calculating the amount of credit your business can claim is:
Add up how many eligible litres of fuel used.
Determine the credit rate that applies to each business activity. Rates vary and generally change every year. For example, the rate applied to transportation on public roads differs from the rates applicable in agriculture, mining, fishing and rail transportation.
Multiply the litres by the applicable tax rate.
Fuel credits are part of your business’s income, so must be included as income in the section of the tax return related to government industry payments.
How to claim fuel tax credits
To clam the credit, your business must be registered for GST. This doesn’t apply to non-profit emergency vehicles. You must also be registered for the fuel tax credits scheme.
Your business must have documentation to show that it bought the fuel, used it in eligible ways and applied the proper rate. There must also be records showing business activities including:
Business expenses that relate to eligible activities
Sales and production records
Lease documents for agricultural land or equipment
Share farming contracts
Vehicle and equipment use and maintenance records
Work contracts; and
Government requirements (such as licences).
Records that support your claims for fuel tax credits include:
Tax invoices for fuel acquired
Records of how the fuel was used and any loss, sale or disposal of the fuel; and
Records showing how the fuel tax credits were calculated.
Disclaimer Westlawn provides this information for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers.
Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.