Katerina Swanson
Businesses can claim back the GST on fuel purchased for creditable purposes through fuel tax credits (FTCs). To be eligible, businesses must be registered for Goods & Services Tax (GST) and fuel tax credits. The amount of GST that can be claimed depends on the type of fuel used and the type of business activity it is used for. For example, fuel used in light vehicles of 4.5 tonnes or less travelling on public roads is ineligible for FTCs. It's important to note that there is a four-year time limit for claiming GST and fuel tax credits, and the process may vary depending on the country.
| Characteristics | Values |
|---|---|
| Time limit for claiming GST credits | 4 years from the due date of the activity statement |
| GST claim for purchases used partly or wholly for private purposes | Only the business portion of the purchase can be claimed |
| GST claim for purchases used for business purposes | The full GST amount can be claimed |
| GST-free items | Fresh food and some medicines |
| GST claim for car purchases above the car limit | Maximum of 1/11th of the limit |
| Fuel tax credits | Applicable for taxable fuel purchased, manufactured, or imported for business use |
| Requirements for fuel tax credits | Registration for goods and services tax (GST) and fuel tax credits |
| Factors affecting fuel tax credit amount | Type of fuel and business activity |
| Simplified fuel tax credits | Applicable for claims less than $10,000 per year |
| Records for fuel tax credit claims less than $10,000 per year | Bank statements, point-of-sale dockets, or fuel supplier statements |
| GST-eligible fuels | Petrol, diesel, kerosene, and LPG |
| Ineligible fuel usage | Light vehicles of 4.5 tonnes or less traveling on public roads |
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What You'll Learn
Fuel tax credits for businesses
Fuel tax credits provide businesses with a credit for the fuel tax included in the price of fuel used for specific business activities. The amount of fuel tax credit that can be claimed depends on the type of fuel used and the business activity it is used for. Some common types of fuel that are eligible for fuel tax credits include gasoline, aviation gasoline, undyed diesel, and kerosene. However, it is important to note that fuel tax credit eligibility and rates vary by location and change regularly, so businesses should refer to their local tax authority for the most up-to-date information.
In the United States, the Internal Revenue Service (IRS) offers fuel tax credits for businesses that use fuel for off-highway business activities, such as equipment, machines, vehicles, and tools that operate on private property, farms, or construction sites, rather than public roads. The IRS provides specific examples to help businesses determine their eligibility for the Fuel Tax Credit. For instance, a landscaping business that uses gasoline to power lawn mowers and chainsaws when performing services for customers qualifies for the credit, whereas a taxpayer who uses gasoline to mow their own lawn does not. Additionally, the IRS offers excise fuel incentive credits for businesses, such as the alternative fuel credit, alternative fuel mixture credit, and second-generation biofuel producer credit, which have been retroactively reinstated and extended through December 31, 2024, by the Inflation Reduction Act.
In Australia, businesses can claim fuel tax credits on their Business Activity Statement (BAS). To be eligible, businesses must be registered for Goods and Services Tax (GST) and fuel tax credits. Businesses should use the rates listed for each financial year to calculate their fuel tax credit rates and keep records from the start of their business activity to accurately calculate and claim their fuel tax credits. The Australian Taxation Office (ATO) provides tools and guidance to help businesses determine their eligibility and calculate their fuel tax credits accurately.
It is important to note that there are time limits for claiming fuel tax credits. In both the US and Australia, businesses generally have up to four years from the due date of the activity statement in which the fuel tax credits could first be claimed. However, businesses should refer to their local tax authorities for specific rules and eligibility requirements, as incorrect claims can result in penalties.
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GST on fuel in Australia
In Australia, fuel is taxed under both the petroleum fuel excise and the Goods and Services Tax (GST). The GST is charged on the excise-inclusive price of the fuel. While businesses can claim input tax credits for the GST on fuel, it is a private expense for households, which means they must bear the full cost of the GST and excise on fuel.
GST-registered businesses can claim input tax credits for the GST on the excise-inclusive price of fuel in their Business Activity Statement (BAS). These fuel tax credits are available for eligible fuels used in business activities, such as petrol, diesel, kerosene, and LPG. However, fuel used in light vehicles of 4.5 tonnes or less travelling on public roads is ineligible for these credits. The amount of fuel tax credit that can be claimed depends on the type of fuel used and the business activity it is used for. The Australian Taxation Office (ATO) provides a fuel tax credit table, updated every February and August, outlining the eligible fuel types and the cents per litre that can be claimed.
To be eligible to claim fuel tax credits, businesses must be registered for GST and fuel tax credits with the ATO. Claims must generally be made within four years of the purchase, starting from the day after the BAS for the relevant tax period is lodged. It is important to note that fuel tax credits are considered business income and should be included in the tax return.
While GST collections do not significantly impact the Australian Government Budget, they influence the price of automotive fuel in the country. Changes in the pump price of fuel directly impact final consumers through the GST payable on the fuel and indirectly through the cost of GST-taxable goods and services that use fuel as an input.
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Calculating fuel tax credits
To calculate fuel tax credits, you must be registered for goods and services tax (GST) and for fuel tax credits. You can claim for taxable fuel that you purchase, manufacture, or import for your business. The amount of fuel tax credit you can claim depends on the type of fuel you use and the business activity you use it in.
The Australian Tax Office (ATO) has provided a few ways to calculate your fuel tax credits. If you claim less than $10,000 in fuel tax credits each year, there is a simplified method. You can use one rate in the BAS period, saving you from using two different rates when the rates change. You can also work out your litres based on the cost of the fuel you purchased. To work out the total litres of fuel, use the total cost of fuel purchased in the BAS period and divide it by the average price of fuel per litre for that period.
If you claim more than $10,000 in fuel tax credits per year, you can use the fuel tax credits calculation worksheet to calculate your fuel tax credits and claim them on your business activity statement (BAS). You can also use the Fuel Tax Credit Calculator to work out your claim online.
To calculate your fuel tax credits using the worksheet, you need to follow these three steps:
- 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.
Remember, the fuel tax credit rates change regularly, so ensure you are using the rate that applied when you acquired the fuel. You must also keep records that support your claim for five years.
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Claiming GST on imported goods
In Australia, goods and services tax (GST) is payable on most goods imported into the country. This tax is payable by businesses, organisations, and private individuals, regardless of whether they are registered for GST. However, if you are a GST-registered business that imports goods as part of your operations, you may be able to claim a GST credit for the GST you've paid on those goods.
To claim a GST credit on imported goods, you must meet certain conditions. Firstly, you must import the goods for a creditable purpose. Secondly, ensure that you have the necessary documentation to prove that the goods have been imported and that GST was either paid or deferred when the goods were entered for home consumption. An import declaration submitted to Home Affairs is required for goods to be entered for home consumption. Once the customs duty and GST have been paid, Home Affairs will release the goods for use in Australia.
It's important to note that you cannot claim a GST credit if you don't possess the relevant documentation or have easy access to it. Examples of acceptable documentation include proof of import and evidence that GST was paid or deferred. Additionally, to claim a GST credit, you must lodge your activity statements on time. You have up to four years from the due date of the activity statement to claim any GST and fuel tax credits.
When claiming fuel tax credits, you must be registered for GST and fuel tax credits. You can claim credits for taxable fuel that you purchase, manufacture, or import, as long as it is used for your business. The amount of fuel tax credit you can claim depends on the type of fuel used and the specific business activity it is used for. You can use the fuel tax credit tools on the ATO website to calculate your fuel tax credits accurately.
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GST on fuel for personal use
In Australia, fuel is taxed under both the petroleum fuel excise and the goods and services tax (GST). The GST is charged on the excise-inclusive price of the fuel. While GST-registered businesses can claim input tax credits for the GST on the price of the fuel, fuel is a private expense for households, and therefore the cost of fuel for personal use includes excise and GST.
If you are a business owner, you can claim fuel tax credits for fuel you purchase, manufacture, or import for business use. To be eligible, you must be registered for GST and fuel tax credits. The amount of fuel tax credit you can claim depends on the type of fuel you use and the business activity you use it in. You can use the ATO's fuel tax credit eligibility tool to determine your eligibility and calculate your fuel tax credits. You can then claim these credits on your business activity statement (BAS).
It is important to note that if you use a purchase for both business and private purposes, you can only claim the business portion of the purchase. Additionally, you must claim your credits within four years, starting from the day after you lodge your BAS for the tax period that you acquired the fuel.
In New Zealand, you can only claim GST on goods and services to the extent that they are used in your taxable activity to make taxable supplies. You cannot claim GST for supplies you use privately or to make exempt supplies.
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Frequently asked questions
The amount of GST you can claim back on fuel depends on the type of fuel you use and what business activity you use it in. You can claim back the GST you're charged on goods and services you buy and use in your taxable activity.
You can claim fuel tax credits on your BAS. Before you can do this, you need to calculate your fuel tax credits using the fuel tax credit tools on the ATO website.
For claims of less than $10,000 per year, you can use bank statements, point-of-sale dockets, or fuel supplier statements. If your business exceeds the $10,000 threshold, more detailed record-keeping is required.
You must claim your credits within four years. This four-year period starts from the day after you lodge your business activity statement for the tax period that you got the fuel in.
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