Katerina Swanson
If you're looking to save money on diesel fuel, you may be eligible for a fuel tax rebate. The process for applying for a rebate varies depending on your location and the nature of your diesel usage. For example, in the US, there are specific requirements for filing a refund claim, and certain exempt sellers and users must register before filing. In Australia, eligibility is determined by fuel usage activities, the date of purchase, and the type of fuel, and there are specific environmental criteria that must be met for heavy diesel vehicles. It's important to stay informed about the changing tax credit rates and any applicable time limits for claiming fuel tax credits.
| Characteristics | Values |
|---|---|
| Who can apply? | Diesel fuel exempt sellers, i.e., any person who is not a licensed ultimate vendor who exports or sells for exempt purposes without collecting the diesel fuel tax reimbursement. |
| Who cannot apply? | Ultimate purchasers, such as farmers and exempt bus operators. |
| Filing requirements | There is no filing requirement unless you have a claim for a refund to submit. |
| Filing deadlines | The timeframe for filing a diesel fuel claim for a refund is generally within six months after the receipt of an invoice for tax. |
| Eligibility criteria | There are four environmental criteria, of which claimants have to satisfy only one. These criteria relate to fuel usage activities, when the fuel was purchased, and the type of fuel. |
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What You'll Learn
Check eligibility for fuel tax credit
To check your eligibility for fuel tax credits, you must first ensure that the fuel was acquired and used for business activities. The fuel tax credit is available only for non-taxable uses of gasoline, aviation gasoline, undyed diesel, and undyed kerosene. This credit does not apply to off-highway business use of gasoline for vehicles used for personal use or commuting to work, non-business use, or other vehicles that are registered or required to be registered to drive on public highways. For example, the gasoline used to power a lawnmower for personal yard maintenance does not qualify for the Fuel Tax Credit.
Additionally, you must register your business for GST and fuel tax credits before claiming fuel tax credits. It is important to keep detailed records from the start of your business activity to accurately calculate and claim your fuel tax credits. These records will assist in determining the amount you can claim. You can use the fuel tax credit calculator to easily calculate the amount to report on your business activity statement.
Furthermore, fuel tax credit rates change periodically, so it is essential to stay updated. For instance, the fuel excise duty was temporarily reduced from 30 March 2022 to 28 September 2022, affecting the fuel tax credit rates during that period. Similarly, the road user charge may influence the fuel tax credit rates for liquid fuels used in heavy vehicles for travelling on public roads.
Lastly, there are time limits for claiming fuel tax credits. You need to claim your fuel tax credits within four years of the due date of the earliest BAS (Business Activity Statement) in which you could have made your claim.
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Understand filing deadlines
Filing deadlines for diesel fuel tax refunds may vary. Generally, the timeframe for filing a diesel fuel claim for a refund is within six months of the tax invoice date or, if the tax was not invoiced at the time of purchase, within six months of receiving the tax invoice, whichever period expires later.
For example, if you receive payment on a bad debt after filing a claim for a refund, you must report the payment as a taxable transaction on the first return filed after receiving payment. You should maintain the following information and records to document a bad debt deduction:
- Date of the original sale of the diesel fuel
- Name and address of the purchaser
- Number of gallons and the dollar amount of bad debt
- Invoices that show the tax was charged
- Amount of tax you paid on the transaction
- All payments or other credits applied to the purchaser's account
- Evidence that the debt has been properly charged off for income tax purposes
If you lose fuel in the course of handling, transportation, or storage, you may file a claim for a refund. However, you cannot be granted refunds based on losses of fuel that occur due to evaporation or shrinkage.
If you are an exempt seller of diesel fuel, you must register through the online services webpage before filing claims for a refund of the tax paid on undyed diesel fuel. Registered exempt sellers may file a Claim for Refund on Nontaxable Sales and Exports of Diesel Fuel online by logging into their online services account.
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Know what to do in case of bad debt
If you are a fuel wholesaler or retailer, you may be able to apply for a rebate on bad debts from fuel sold on credit. This is available in some jurisdictions, such as Nova Scotia, where wholesalers and retailers need to apply within 48 months of the end of the first fiscal year that the bad debt was no longer included as an account receivable in your records. You must use the Fuel Tax – Bad Debts Rebate Application Form to apply for a fuel tax rebate on bad debts from fuel sold on credit. If the debt is paid after you receive a rebate, you must repay the relevant authority, such as the Minister of Finance in Nova Scotia.
To be eligible for a rebate, you must meet certain criteria. For example, in Nova Scotia, you must prove that:
- You haven't assigned the debt without recourse and for consideration other than for security purposes.
- The amount claimed was bought from you within 180 days of the debtor’s final credit purchase from you.
- You paid the fuel tax on the bad debts.
Additionally, you should maintain certain information and records to document a bad debt deduction, such as:
- The date of the original sale of the diesel fuel.
- The name and address of the purchaser.
- The number of gallons and the dollar amount of bad debt.
- Invoices that show the tax was charged.
- The amount of tax you paid on the transaction.
- All payments or other credits applied to the purchaser's account.
- Evidence that the debt has been properly charged off for income tax purposes.
It is important to note that the ability to claim a rebate for bad debts may vary depending on the jurisdiction and the specific circumstances of the debt. For example, in Missouri, licensed suppliers and permissive suppliers may take a deduction on their monthly report for fuel tax not received from their sales to a licensed distributor with "eligible purchaser status". In this case, the eligible purchaser is a distributor that has been authorized by the director to purchase motor fuel on a tax-deferred basis, allowing them to delay payment of the tax.
In some cases, you may be able to claim a credit for the fuel tax included in the price of fuel used in certain activities. For example, in Australia, businesses can claim fuel tax credits for the fuel tax included in the price of fuel used in their business activities. The amount of the credit depends on when you acquire the fuel, what fuel you use, and the activity you use it for. However, it's important to note that not all fuels and activities are eligible for these credits. For instance, in the United States, the Fuel Tax Credit is not available to most taxpayers and is only available for nontaxable uses of certain types of fuel, such as undyed diesel and off-highway business use.
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Learn who qualifies as a diesel fuel exempt seller
In California, the sale of diesel to farmers or ranchers qualifies for a partial sales and use tax exemption when they use the fuel for qualifying farming activities, food processing, or related contract hauling. To qualify for the partial exemption, the diesel fuel must be suitable for use in a diesel-powered highway vehicle.
Farmers can provide a CDTFA-608, Certificate of Farming Use, to their vendor to purchase undyed diesel fuel without the state excise tax. The farmer must provide their Federal Employer Identification Number (EIN) or social security number (SSN) on the certificate, which is used to enter the farmer into the database as a person claiming exempt use of diesel fuel.
Exempt bus operators who use diesel fuel in exempt bus operations can also provide an exemption certificate to purchase tax-paid undyed diesel fuel without being charged tax.
In Australia, fuel tax credit rates for businesses are available from 1 July 2024 to 30 June 2025. Businesses can use the fuel tax credit calculator to work out the amount to report on their business activity statement.
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$79.99
Learn about environmental criteria for heavy diesel vehicles
To apply for a diesel fuel rebate, or a fuel tax credit, for heavy diesel vehicles, there are certain criteria that must be met. The fuel tax credit scheme refunds fuel tax to users of heavy vehicles, machinery, plant and equipment, and light vehicles used off public roads. The scheme is designed to relieve industries of the excise or duty that they pay on the diesel they use.
To be eligible for a fuel tax credit, the fuel must be 'taxable fuel', meaning that fuel tax (excise or customs duty) must be paid on it. Eligible liquid fuels include diesel, fuel oil, kerosene, mineral turpentine, white spirits, toluene, and heating oil. Blended fuels, such as diesel with biodiesel, are treated as taxable fuel as long as the biodiesel component does not exceed 20%.
For heavy diesel vehicles, there are environmental criteria that must be satisfied to be eligible for a fuel tax credit. These criteria apply to diesel vehicles over 4.5 tonnes gross vehicle mass, which are used in on-road business activity. There are four environmental criteria, and claimants need only satisfy one of them. These criteria include passing the Australian Transport Council's in-service emission standard for diesel vehicles (the "DT80" test), and conducting regular engine maintenance on the vehicle, following the manufacturer's specified maintenance schedule or the generic maintenance schedule endorsed by the Transport Secretary.
It is important to note that fuel tax credit rates change for liquid fuels used in heavy vehicles travelling on public roads due to changes in the road user charge. These rates are indexed twice a year and are available on the Australian Taxation Office website.
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Frequently asked questions
Diesel fuel exempt sellers include any person who is not a licensed ultimate vendor who exports or sells for exempt purposes without collecting diesel fuel tax reimbursement.
To be eligible for the credit, the vehicle must satisfy one of the four environmental criteria. The criteria apply to diesel vehicles over 4.5 tonnes gross vehicle mass, which are used in an on-road business activity.
The deadline for filing your diesel fuel rebate claim depends on the specific circumstances of your purchase. If the tax was not invoiced at the time of purchase, the refund claim must be filed within six months of receiving the invoice for tax.
You can use the Australian Government fuel tax credit eligibility tool to determine your eligibility. Eligibility is determined by fuel usage activities, the date of purchase, and the type of fuel.
You should maintain records and information such as the date of the original sale, the name and address of the purchaser, the number of gallons and dollar amount of the bad debt, and invoices showing the tax charged.
