Rajan Wilcox
In Australia, the main fuel tax is an excise tax, which includes a 10% goods and services tax (GST). Excise duty rates are indexed twice a year, on 1 February and 1 August, based on the consumer price index (CPI). The fuel excise tax has undergone adjustments over the years, with rates varying for different types of fuel and businesses eligible for exemptions or rebates. As of 1 February 2022, the excise tax on commonly used fuels was $0.442 per litre for unleaded petrol and diesel fuel.
| Characteristics | Values |
|---|---|
| Main Fuel Tax | Excise Tax |
| Goods and Services Tax (GST) | 10% |
| Excise Tax Rate for Unleaded Petrol Fuel | $0.442 per litre |
| Excise Tax Rate for Diesel Fuel | $0.442 per litre |
| Excise Tax Rate for Petrol for Use in Aircraft | $0.03556 per litre |
| Fuel Excise Tax Rate as of 10 November 2014 | 38.6 cents per litre |
| Fuel Excise Rate from April 1 to October 1, 2022 | 22.1 cents per litre for all road fuels |
| Fuel Tax Credit Eligibility for Businesses | Businesses with aggregated turnover of less than $10 million ($50 million from 1 July 2021) |
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What You'll Learn
Excise tax and GST
The main fuel tax in Australia is an excise tax, on top of 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. In some cases, businesses may be entitled to exemptions or rebates for fuel excise tax, including tax credits and access to certain excise-free fuel sources.
The "double dipping" (GST imposed on the excise tax) was fully compensated for by lowering the excise when the GST was introduced in 2001. While the excise stopped being indexed for inflation in 2001, indexation was reintroduced in 2014. The tax collected is added to general revenue. From April 1 to October 1, 2022, the fuel excise was lowered or cut by 50% by the federal budget to 22.1 cents per litre for all fuels. The excise tax on commonly used fuels in Australia 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.
Excise duty rates increase in July each year for biodiesel. From 30 March to 28 September 2022, the excise and excise equivalent customs duty rates for petrol, diesel, and all other fuel and petroleum-based products (except aviation fuels) were temporarily reduced. These rates returned to the full rate on 29 September 2022. The excise duty rates may also change due to other law changes. The law indexes the excise duty rates for fuel and petroleum products (other than aviation fuels and certain petroleum-based products) twice a year, based on the upward movement of the consumer price index (CPI).
Fuel tax credits are available for businesses that use fuel. Businesses can claim credits for the fuel tax (excise or customs duty) included in the price of the fuel they use in their business activities. To be able to claim, businesses must be registered for GST and fuel tax credits. Fuel tax credit rates change regularly and are indexed twice a year – in February and August – in line with the CPI.
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Fuel tax credits
Businesses can use the fuel tax credit calculator provided by the Australian Taxation Office to work out their claims. Businesses must register for GST and fuel tax credits before claiming fuel tax credits on their business activity statement (BAS). Businesses can claim fuel tax credits by completing the fuel tax credit labels on their BAS.
Fuel tax credit rates change regularly and are indexed twice a year, in February and August, in line with the consumer price index (CPI). The CPI indexation factor for rates from 4 August 2025 is 1.016. Businesses can access historical fuel tax credit rates by downloading the data file on the Australian Government data.gov.au website.
To be eligible for fuel tax credits, businesses must satisfy at least one of four environmental criteria. Criterion 1 applies to vehicles manufactured on or after 1 January 1996. Criteria 2, 3, and 4 are options for vehicles of all ages. The government has provided options to ensure that any operator who maintains the emission-related components of their vehicle in a reasonable manner will be able to claim the fuel tax credit.
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Fuel tax rates
In Australia, the main fuel tax is an excise tax, which is levied by the federal government. The Goods and Services Tax (GST), currently at 10%, is applied on top of the fuel excise tax. The excise duty rates for fuel and petroleum products (excluding aviation fuels and certain petroleum-based products) are indexed twice a year, on 1 February and 1 August, based on the consumer price index (CPI). The Australian Bureau of Statistics (ABS) is responsible for determining and publishing the CPI.
From 30 March to 28 September 2022, the excise and excise equivalent customs duty rates for petrol, diesel, and other fuel and petroleum-based products were temporarily reduced. These rates returned to the full rate on 29 September 2022. The excise duty rate for biodiesel increases in July each year. The fuel excise tax was increased to 38.6 cents per litre on 10 November 2014, when the federal government restored CPI indexation to the tax every six months. From 1 April to 1 October 2022, the federal budget halved the fuel excise to 22.1 cents per litre for all road fuels. As of 1 February 2022, the excise tax on commonly used fuels in Australia was $0.442 per litre for both unleaded petrol (including standard, blended (E10), and premium grades) and diesel fuel. Petrol for use as aircraft fuel is taxed at $0.03556 per litre.
Businesses that consume large amounts of fuel in their business processes, such as mining, manufacturing, construction, and plant operations, may be entitled to exemptions or rebates for fuel excise tax, including tax credits and access to certain excise-free fuel sources. They can claim credits for the fuel tax (excise or customs duty) included in the price of the fuel they purchase, manufacture, or import for use in their business activities. The Australian government also offers various grants and incentive schemes, such as the Fuel Excise (Road Funding) Special Account, which provides funding for road infrastructure investment in the States and Territories.
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Aviation fuel tax
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. The GST, currently at 10%, is applied on top of the fuel excise tax. The excise duty rates for fuel and petroleum products (except aviation fuels and certain petroleum-based products) are indexed twice a year, on 1 February and 1 August, based on the upward movement of the consumer price index (CPI).
While businesses may be entitled to exemptions or rebates for fuel excise tax on other fuel types, this does not extend to aviation fuels. This includes aviation gasoline and aviation kerosene, for which fuel tax credits cannot be claimed. However, there may be circumstances where businesses can claim fuel tax credits for aviation fuel. For example, if a business uses diesel or petrol in an aircraft and is registered for GST, they may be entitled to claim fuel tax credits if they can provide details that the fuel was not entered into home consumption as aircraft fuel at the time of purchase.
The excise tax on aviation fuel in Australia is separate from the fuel tax system for road user charges, which applies to heavy vehicle operators and is designed to cover the cost of road construction and maintenance. The aviation fuel excise is specifically used to fund aviation safety regulation, ensuring that the revenue collected is directed towards this specific purpose.
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Tax on business inputs
Businesses in Australia may be able to claim fuel tax credits for the fuel they use in their operations. The amount of fuel tax credit that can be claimed depends on the type of fuel and the activity it is used for. For example, the rate of fuel tax credit for gasoline used in heavy vehicles may differ from that for gasoline used in light vehicles.
To claim fuel tax credits, businesses must maintain detailed records of their fuel purchases and usage. They also need to be registered for fuel tax credits with the Australian Taxation Office (ATO). The ATO provides a comprehensive list of eligible fuels and their corresponding rates on their website, which businesses can refer to.
It's important to stay updated with the latest information as the fuel tax credit rates are subject to change. Additionally, specific rules and eligibility criteria may apply to certain industries or fuel usage scenarios. Understanding these specifics is crucial for accurate claiming.
When claiming fuel tax credits, businesses can include the amount in their business activity statement (BAS). The frequency of reporting can vary, with some businesses reporting quarterly and others annually. It is essential for businesses to be well-informed about their obligations and remain compliant with the relevant reporting requirements.
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Frequently asked questions
The main fuel tax in Australia is an excise tax, which is levied by the federal government.
The excise duty rates for fuel are changed twice a year, on 1 February and 1 August, based on the upward movement of the consumer price index (CPI).
As of 2024, the fuel excise tax in Australia is 49.6 cents per litre.
In addition to the fuel excise tax, the Goods and Services Tax (GST) is also levied on the retail price of fuel at a standard rate of 10%.
