Katerina Swanson
Fuel tax in Australia is a significant cost for many individuals and businesses. The main fuel tax is an excise tax, with an additional 10% goods and services tax (GST) imposed on top. Fuel tax rates vary and are subject to periodic adjustments, with rates for unleaded petrol and diesel fuel being $0.442 per litre as of February 2022. The Australian government has also implemented schemes such as fuel tax credits and subsidies for businesses with high fuel consumption, like those in mining and manufacturing. Understanding the impact of fuel taxes on consumers and businesses is essential for managing transportation and operational costs in Australia.
| Characteristics | Values |
|---|---|
| Main fuel tax | Excise tax |
| GST | 10% |
| Excise tax rate as of 1 February 2022 | $0.442 per litre on unleaded petrol fuel (including standard, blended (E10) and premium grades) |
| Excise tax rate as of 1 February 2022 | $0.442 per litre on diesel fuel |
| Fuel tax credit | Available for businesses that do not run large vehicle fleets but consume large amounts of fuel in business processes (e.g. mining, manufacturing, construction, plant operations) |
| Fuel tax credit rates change | Twice a year in February and August |
| Fuel tax credit eligibility | Businesses must be registered for GST and fuel tax credits |
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What You'll Learn
Fuel tax credits for businesses
In Australia, fuel tax credits provide businesses with a credit for the fuel tax (excise or customs duty) included in the fuel price. The amount of credit depends on when the fuel is acquired, the type of fuel, and how it is used. Fuel tax credit rates change regularly, so it is important to check the rates each time a business activity statement (BAS) is completed.
Businesses can claim credits for fuel tax on taxable fuel they purchase, manufacture, or import, provided it is used in their operations. This includes fuel used in business activities such as mining, manufacturing, construction, and plant operations. However, it is important to note that some fuels and activities are not eligible for fuel tax credits, including fuel used in light vehicles of 4.5 tonnes gross vehicle mass (GVM) or less when travelling on public roads.
To claim fuel tax credits, businesses must be registered for goods and services tax (GST) and fuel tax credits. Claims must be made within four years, starting from the day after lodging the BAS for the tax period when the fuel was purchased. Small businesses with an aggregated turnover of less than $10 million ($50 million from 1 July 2021) can report and pay their excise obligations monthly. Additionally, if a business claims less than $10,000 in fuel tax credits annually, there is a simplified calculation method available.
Fuel tax credits are considered business income, so they should be included in the tax return under 'Assessable Government Industry Payments'. According to the Australian Taxation Office, the largest proportion of fuel tax credits are paid to businesses in the mining industry, followed by the transport, postal, and warehousing industries, and then agriculture, forestry, and fishing.
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Fuel excise tax
In Australia, the main fuel tax is an excise tax, which includes a goods and services tax (GST) of 10%. Excise duty rates are expressed per litre, kilolitre, or kilogram of fuel and petroleum products, including gaseous fuels. The excise tax on commonly used fuels as of 1 February 2022 was $0.442 per litre on unleaded petrol fuel (including standard, blended (E10), and premium grades) and $0.442 per litre on diesel fuel. From 30 March to 28 September 2022, these excise duty rates were temporarily reduced.
The excise tax is collected at the point where fuel leaves a designated storage depot, and it is paid by the manufacturer or importer to the Australian Taxation Office, mostly on a weekly basis. Small businesses with an aggregated turnover of less than $10 million ($50 million from 1 July 2021) can report and pay their excise obligations monthly.
Businesses may be entitled to exemptions or rebates for fuel excise tax, including tax credits and certain excise-free fuel sources. The Fuel Tax Credits Scheme, which came into effect on 1 July 2008, allows businesses that do not run large vehicle fleets but consume large amounts of fuel in business processes (such as mining, manufacturing, construction, and plant operations) to claim fuel tax credits. The Australian Taxation Office provides tools to help businesses calculate their fuel tax credit rates and determine their eligibility.
The fuel excise tax is used to fund road infrastructure in Australia. Partial hypothecation was reintroduced in 2014, which involves the Australian Government paying an amount equal to the net revenue from reintroducing fuel excise indexation to a special account for payment to the States and Territories for road infrastructure.
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Goods and services tax (GST)
The main fuel tax in Australia is an excise tax, to which Goods and Services Tax (GST) is added. Both taxes are levied by the federal government. The GST, currently at 10%, is applied on top of the fuel excise tax. This results in "double dipping", where GST is imposed on the excise tax. However, when GST was introduced in 2001, the "double dipping" was compensated for by lowering the excise tax.
GST is a tax applied to most goods, services, and other items sold or consumed in Australia. It is calculated as one-eleventh of the sale price and must be collected from customers by businesses registered for GST. These businesses then pay the collected GST to the Australian Taxation Office (ATO). Registration for GST is mandatory for businesses with a GST turnover of A$75,000 or more, and optional for those below this threshold.
GST on fuel has a direct impact on final consumers through the payable amount on fuel purchases. Additionally, it has an indirect effect on the cost of GST-taxable goods and services that utilise fuel as an input. This indirect impact arises because GST is levied on the full price of the goods or services supplied, including the value of fuel used as an input.
The Australian Fuel Tax Credits Scheme (FTCS) offers subsidies for off-road business fuel usage, benefiting businesses that do not operate large vehicle fleets but consume significant amounts of fuel in their operations, such as mining, manufacturing, and construction. The FTC system refunds the excise tax included in the price of fuel for eligible businesses, making fuel taxes predominantly a tax on household fuel consumption.
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Fuel tax rates
In Australia, the main fuel tax is an excise tax, which includes a 10% goods and services tax (GST) on top. The excise tax rates are indexed twice a year, on the 1st of February and the 1st of August, based on the consumer price index (CPI). These rates are expressed per litre, kilolitre, or kilogram of fuel and petroleum products. As of the 1st of February 2022, the excise tax was $0.442 per litre on unleaded petrol fuel (including standard, blended (E10), and premium grades) and $0.442 per litre on diesel fuel. From April 1st to October 1st, 2022, the federal budget lowered the fuel excise tax by 50% to 22.1 cents per litre for all fuels. From March 30th to September 28th, 2022, the excise duty rates for petrol, diesel, and all other fuel and petroleum-based products (excluding aviation fuels) were also temporarily reduced.
Businesses that consume large amounts of fuel in their operations, such as mining, manufacturing, construction, and plant operations, are eligible for fuel tax credits under the Australian Fuel Tax Credits Scheme. The Fuel Excise (Road Funding) Special Account was established to transfer amounts equal to the net revenue from excise duties on fuel to the COAG Reform Fund for investment in Australian road infrastructure.
Small businesses with an aggregated turnover of less than $10 million (increased to $50 million from July 1, 2021) can report and pay their excise obligations monthly instead of weekly. Additionally, fuel tax credit rates are adjusted annually in February and August, and businesses can use the fuel tax credit calculator to determine their eligible claims.
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Fuel tax exemptions and rebates
In Australia, the main fuel tax is an excise tax, which is levied by the federal government and to which goods and services tax (GST) is added. While some businesses may be eligible for exemptions or rebates for fuel excise tax, there are also grants and incentive schemes involving tax credits and rebates for businesses or industries that rely heavily on the use of fuels.
Fuel Tax Credits (FTCs)
Fuel tax credits provide businesses with a credit for the fuel tax (excise or customs duty) that's included in the price of fuel used. The amount depends on when the fuel is acquired, the type of fuel used, and the activity it is used for. Fuel tax credits rates change regularly, and certain fuels and activities are not eligible, including fuel used in light vehicles of 4.5 tonnes gross vehicle mass (GVM) or less travelling on public roads.
Australian Fuel Tax Credits Scheme
The second phase of the Australian Fuel Tax Credits Scheme came into effect on 1 July 2008. Under these changes, all off-road business use of fuel became eligible for subsidies. This benefited businesses that do not run large vehicle fleets but consume large amounts of fuel in business processes (e.g., mining, manufacturing, construction, and plant operations).
Fuel Excise (Road Funding) Special Account
As part of the reintroduction of fuel excise indexation, the 2014-15 Budget included a measure to establish a Fuel Excise (Road Funding) Special Account. Amounts equal to the net revenue from reintroducing indexation on customs and excise duties on fuel are transferred to the COAG Reform Fund to provide funding for Australian road infrastructure investment.
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Frequently asked questions
In Australia, the fuel tax is levied by the federal government and consists of an excise tax and a 10% goods and services tax (GST) on top of the excise tax. As of 29 September 2022, the excise tax rate was 46 cents per litre for all fuels.
Fuel tax rates in Australia change regularly and are adjusted twice a year, typically on 1 February and 1 August, in line with the consumer price index (CPI). However, the rates may also change due to other law amendments.
Yes, businesses can claim fuel tax credits for the fuel tax (excise or customs duty) included in the price of fuel used for their business operations. The Australian Taxation Office (ATO) provides tools and guidance to help businesses calculate and claim these credits.
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