Ameer Randolph
Businesses that use diesel fuel in heavy road vehicles may be eligible for a fuel tax credit. This credit is available for liquid fuels like diesel and gaseous fuels like liquefied natural gas, but the vehicle must meet certain environmental criteria to qualify. The fuel tax credit rate is indexed twice a year, in February and August, and businesses can use the fuel tax credit calculator to work out the amount they can claim.
| Characteristics | Values |
|---|---|
| How to calculate the diesel fuel rebate | Use the fuel tax credit calculator to work out the amount to report on your business activity statement (BAS) |
| How often are fuel tax credit rates adjusted? | Twice a year – in February and August – in line with the consumer price index (CPI) |
| Eligibility for fuel tax credit for heavy diesel vehicles | Diesel vehicles over 4.5 tonnes gross vehicle mass which are used in an on-road business activity and pass the Australian Transport Council's in-service emission standard for diesel vehicles (DT80 test) |
| Engine maintenance eligibility criteria | Subject to certain conditions, you have the choice of either adhering to the manufacturers' specified maintenance schedules for the vehicle, or adhering to the appropriate generic maintenance schedule endorsed by the Transport Secretary |
| Other eligibility criteria | Vehicles manufactured on or after 1 January 1996, vehicles with engines manufactured on or after that date that have been retrofitted, vehicles that are part of an accredited audited maintenance program |
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What You'll Learn
Eligibility for fuel tax credits
Australia
In Australia, businesses can claim fuel tax credits for the fuel tax (excise or customs duty) included in the price of fuel used in their business activities. This includes fuel that the business purchases, manufactures, or imports. To be eligible, businesses must be registered for goods and services tax (GST) and fuel tax credits. Claims must generally be made within four years of the day after lodging the business activity statement (BAS) for the relevant tax period. Businesses can use the fuel tax credit calculator to work out the amounts for their BAS.
United States
In the United States, the Fuel Tax Credit (FTC) is a refundable tax credit for fuel used for off-highway business and farming purposes. The credit is available only for nontaxable uses of gasoline, aviation gasoline, undyed diesel, and undyed kerosene. To be eligible, the fuel must not be used for personal use, commuting to work, or driving for ridesharing services such as Uber or Lyft. Additionally, certain types of vehicles and equipment used for off-highway business purposes, such as minibikes, snowmobiles, power lawn mowers, and chain saws, are ineligible for the FTC. To claim the FTC, businesses must complete Form 4136 and provide a list of eligible vehicles and equipment, along with proof of ownership and invoices or receipts for fuel purchases.
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Calculating fuel tax credits
To calculate fuel tax credits, you must be registered for both fuel tax credits and GST. The easiest way to work out the amount to claim is by using the fuel tax credit calculator provided by the Australian Taxation Office (ATO). This calculator can be used to calculate the amount to report on your business activity statement (BAS). The fuel tax credit rates are indexed twice a year, in February and August, in line with the consumer price index (CPI).
The ATO also provides a calculation worksheet to help you calculate your fuel tax credits and claim them on your BAS. There are three steps to calculate your fuel tax credits using the worksheet:
- Work out how much fuel (liquid or gaseous) you acquired for each business activity.
- Multiply the eligible quantity of fuel by the relevant fuel tax credit rate.
- Divide the result by 100 to convert it into dollars. Claim the whole dollar amount on your BAS and do not include cents.
You can also use a simplified method if you claim less than $10,000 in fuel tax credits each year. Additionally, the ATO provides guidance and tools on its website to help you determine your eligibility and calculate the amount you can claim.
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Fuel tax credit rates
Businesses can claim credits for the fuel tax (excise or customs duty) included in the price of fuel used in their business activities. This includes fuel purchased, manufactured, or imported for the business. To be eligible for fuel tax credits, businesses must be registered for goods and services tax (GST) and for fuel tax credits. Claims must be made within 4 years of the due date of the earliest BAS (business activity statement) in which the claim could have been made.
The easiest way to calculate fuel tax credit rates is by using the fuel tax credit calculator provided by the Australian Taxation Office (ATO). This calculator helps businesses determine the amounts to report on their BAS. Businesses can also access historical fuel tax credit rates by downloading data files from the Australian Government website.
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Environmental criteria for diesel vehicles
Businesses can claim credits for the fuel tax included in the price of the fuel they use. This includes fuel that is purchased, manufactured, or imported. To be eligible, businesses must be registered for goods and services tax (GST) and for fuel tax credits. Claims for fuel tax credits can be made for up to four years.
Under the Fuel Tax Act 2006, businesses that use diesel fuel in heavy road vehicles (over 4.5 tonnes gross vehicle mass) for on-road business activity must satisfy one of four environmental criteria to be eligible for the fuel tax credit. These criteria do not apply to vehicles that operate on other fuels, such as petrol, LPG, or CNG, or to motor vehicles primarily used on an agricultural property.
The four environmental criteria for diesel vehicles to be eligible for the fuel tax credit are as follows:
- The vehicle must pass the Australian Transport Council's in-service emission standard for diesel vehicles ("DT80" test). This test must be performed by a suitably equipped test facility, as determined by the Australian Taxation Office.
- The vehicle must be manufactured on or after January 1, 1996. Vehicles manufactured before 1996 but retrofitted with an engine manufactured on or after this date may also qualify.
- The vehicle must be part of an accredited audited maintenance program. These programs must meet certain minimum requirements related to emissions performance and auditing and must be accredited by the Transport Secretary.
- Regular engine maintenance must be conducted on the vehicle, either according to the manufacturer's specified maintenance schedule or an appropriate generic maintenance schedule endorsed by the Transport Secretary.
The fuel tax credit rates are adjusted twice a year, in February and August, in line with the consumer price index (CPI). Businesses can use the fuel tax credit calculator to determine the amount they can claim in their business activity statement (BAS).
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Maintenance requirements for fuel tax credits
The Fuel Tax Credit (FTC) is a federal subsidy that allows businesses to reduce their taxable income on specific types of fuel costs. The credit is available only for nontaxable uses of gasoline, aviation gasoline, undyed diesel, and undyed kerosene. The FTC is not available to most taxpayers and is generally limited to off-highway business use, agriculture and farming, and boats and buses.
To be eligible for fuel tax credits, businesses must be registered for goods and services tax (GST) and fuel tax credits. The credit is calculated based on the fuel tax included in the price of the fuel used in business activities. This includes fuel that is purchased, manufactured, or imported for use in the business.
The value of the fuel tax credit is the difference between the diesel fuel excise rate and the Road User Charge. The Road User Charge recovers part of the road construction and maintenance costs attributed to heavy vehicles. The Fuel Tax Act 2006 establishes a mechanism for collecting the Road User Charge by reducing the fuel tax credit on each litre of fuel used by eligible heavy vehicle operators.
To claim fuel tax credits, businesses must meet certain maintenance requirements. The Australian government has finalized the requirements for audited maintenance programs, and administrators can seek accreditation by contacting the relevant department. For claiming fuel tax credits, maintenance must be started no later than 1 July 2006. Operators are suggested to record their vehicle's odometer reading on 1 July 2006 and use that figure to determine the required maintenance intervals.
To satisfy the environmental criteria for fuel tax credits, vehicles must meet one of the four criteria. Vehicles manufactured on or after 1 January 1996 are eligible under Criterion 1. Criteria 2, 3, and 4 are options for vehicles of all ages. Owner/operator servicing is acceptable under Criterion 4, provided that the maintenance requirements are met and relevant records are kept. Manufacturer's maintenance schedules are also acceptable, but if they do not cover all the required maintenance items, a generic schedule should be followed for those items.
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Frequently asked questions
Businesses can claim credits for the fuel tax included in the price of the fuel they use.
To be eligible for the rebate, you must be registered for goods and services tax (GST) and for fuel tax credits.
You can use the fuel tax credit calculator to work out the amount to report on your business activity statement (BAS).
Generally, you must claim your credits within 4 years. The 4-year period starts from the day after you lodge your business activity statement (BAS).
Fuel tax credit rates are indexed twice a year – in February and August – in line with the consumer price index (CPI).
