Fuel Tax Credits And Rebates Explained
If your brand or business is on the road a lot, or perhaps requires machinery to get the job done, then it's important to understand how fuel tax credits work.
Depending on the nature of your brand or the sector in which you operate, it’s pretty fair to say that many businesses great and small require a vehicle of some form as a means to perform day to day tasks that form parts of their business operations. While this alone comes with a broad range of potential tax offsets, one of the most popular to pursue are fuel tax credits.
If your business uses vehicles or fuel-operated equipment on or off-road in Australia, you’re entitled to claim rebates on some - or even all - of the fuel tax that you have paid. However, both understanding and meeting the exact requirements of the rebates are where some brands can come undone with their claims, so what is there to know when it comes to fuel tax credits?
Understanding Fuel Tax Credits In Australia
In simple terms, fuel tax credits provide businesses with a rebate for the fuel tax paid at the bowser or pump in order to run heavy vehicles, light vehicles, machinery, plant and equipment. Excise or custom duty is paid at the pump and then refunded to businesses by the Australian Tax Office via a Business Activity Statement (BAS).
Fuel tax credits are available to any business that uses fuel to power vehicles needed to keep their brand running, including small operators and owner drivers. As a general rule, aircrafts, light vehicle travel on public roads and personal use of fleet vehicles are excluded from the rebate.
As a general rule, businesses can claim fuel tax credits on heavy vehicles travelling on public roads, and off-road for vehicles or equipment using diesel, petrol and some blended fuels for the following activities.
Light vehicles travelling or idling off public roads or on private property
Heavy vehicles travelling or idling off public roads or on private property
The use of auxiliary equipment such as concrete trucks, compressors, air conditioning and refrigeration units.
To make a claim for fuel tax credits, your business must be registered for GST when the fuel is acquired, and your business must be registered for fuel tax credits when the claim is lodged. Once these are both actioned, a brand or business can claim fuel tax credits for eligible fuel acquired, manufactured or imported and used in your business.
Fuel tax credits rates also change regularly, so it's important to check the rates each time you submit your BAS. If you claim less than $10,000 in fuel tax credits per year, the easiest and safest way to get your claims right is to use one of the following methods.
The basic method for heavy vehicles, which calculates your off public road use on your behalf so that you don’t miss out on any credits.
The rate that applies at the end of your BAS period, so if there is a change in rate during the BAS period, you don't need to split your fuel purchases and use two different rates.
GPS devices can also be a useful tool when calculating your fuel tax credit claims. Make sure it has an ATO product or class ruling for accurate reports.
While there are many other business taxes that may apply to your brand or entity, some are more common than others, with a portion also requiring proactive registration. If you’re not sure about your legal or tax obligations as an entrepreneur trading in Australia, it’s always wise to speak to the professionals to avoid landing yourself in hot water - but where do you find them?
Sourcing Help With Managing Your Tax Obligations
Whether you’re starting a business, purchasing an existing one, or even re-evaluating where your current enterprise stands - all require some form of financial know-how if you hope to successfully navigate your legal tax requirements as well as hitting your financial and business goals.
However, if understanding the legalities that surround your business or finances isn’t your strong point, then it may be reassuring to know that you’re not alone. In fact, many businesses (big and small) enlist the services of an accountant in order to free up their time while knowing that their financial obligations are already taken care of by the professionals.
Ultimately, the team at Muro believe that every business owner is an entrepreneur. However, accounting does not discriminate - finances break down barriers and are not territorial. If you would like to take a deeper look into your finances, please get in touch with us at Muro today to ensure that you’re on the right path for success.