Fuel tax credits: What Australian businesses can claim

Published Saturday 11 July 2026

Table of contents

• What are fuel tax credits?
• Who is eligible and what fuel use qualifies?
• How do you register for fuel tax credits?
• What are the current fuel tax credit rates?
• How do you work out and claim on your BAS?
• What records do you need to keep?
• Tips to get your fuel tax credits right
• Simplify fuel tax credits with Xero
• FAQs on fuel tax credits

Key takeaways

• Claim back fuel tax on eligible business use including machinery, off-road activities, and heavy vehicles subject to the road user charge.
• Confirm fuel tax credit eligibility with the ATO, register for GST and fuel tax credits, and base claims on where and how fuel is used.
• Apply the correct fuel tax credit rates for each date and activity, and split claims if rates change within the period.
• Keep strong fuel tax credit records so you can apportion litres and claim accurately on your BAS.

What are fuel tax credits?

Fuel tax credits are a refund of the fuel excise or customs duty you pay when you buy fuel for your business. When you purchase diesel, petrol, or certain other fuels, the price includes fuel excise, a tax applied at the wholesale level. If you use that fuel in eligible business activities, the Australian Taxation Office (ATO) lets you claim back some or all of that excise as a credit on your tax bill.

This isn't a tax deduction that reduces your taxable income; it's a direct credit that reduces the tax you owe or increases your refund when you lodge your business activity statement (BAS). Fuel tax credits apply to business use only, not private use, and are typically claimed on your BAS each quarter or month, depending on your reporting cycle.

The purpose of the scheme is to ensure businesses aren't taxed on fuel used off public roads or in heavy vehicles that already pay the road user charge. It levels the playing field so you're only paying fuel excise for actual road use in light vehicles, not for machinery, equipment, or off-road operations that don't contribute to road wear.

Who is eligible and what fuel use qualifies?

To claim ATO fuel tax credits, you need to meet three core requirements: you run a business in Australia, you're registered for goods and services tax (GST), and you're registered for fuel tax credits with the ATO. If you're not yet registered for fuel tax credits, you can do so through the Australian Business Register or your myGov account linked to the ATO.

Eligibility depends on how and where you use the fuel, not just on buying it. The ATO distinguishes between:

• on-road use in light vehicles (generally not eligible)
• on-road use in heavy vehicles (eligible at a reduced rate after the road user charge is deducted)
• off-road or auxiliary use (often eligible at the full rate)

Eligible fuels and activities

The most common eligible fuels are diesel, petrol, and certain gaseous fuels like liquefied petroleum gas (LPG) and liquefied natural gas (LNG). You can claim credits for fuel used in:

• Off-road machinery and equipment: These include forklifts, excavators, generators, chainsaws, and agricultural machinery operating on private property or worksites.
• Heavy vehicles over 4.5 tonnes gross vehicle mass: These are vehicles travelling on public roads, subject to a reduction for the road user charge.
• Auxiliary equipment: This applies to equipment on vehicles, such as refrigeration units on trucks, concrete mixers, or hydraulic tailgate lifts, even when the vehicle is on a public road.
• Off-road business activities: These activities include construction, farming, mining, forestry, and similar industries where fuel powers equipment that doesn't travel on public roads.

For example, if you run a construction business and use diesel in an excavator on-site, that's eligible. If you operate a refrigerated delivery truck over 4.5 tonnes and the refrigeration unit runs on diesel, the fuel consumed by the fridge unit qualifies as auxiliary use. If you're a farmer using petrol in a ride-on mower or a pump for irrigation, that's eligible off-road use.

Ineligible uses

Fuel tax credits only apply to certain types of fuel use, and some uses are excluded, such as:

• Light vehicles under 4.5 tonnes gross vehicle mass: If these vehicles are travelling on public roads for business purposes (you can't claim for a standard ute, car, or van used for deliveries or site visits)
• Private or domestic use of any kind: This applies even if the fuel was purchased through your business
• Fuel already supported by another government concession: This also includes through a rebate scheme
• Aviation fuels: This applies in most cases, unless specific rules apply to your industry

If you use a vehicle or piece of equipment for both eligible and ineligible purposes, you need to apportion the fuel use and only claim the eligible portion. For instance, if a piece of machinery runs on-road one day and off-road the next, you'll need to split the litres accordingly.

Heavy versus light vehicles

A heavy vehicle fuel tax credit applies to vehicles with a gross vehicle mass (GVM) over 4.5 tonnes when they travel on public roads. However, the credit rate is reduced by the road user charge, which is a per-litre amount set by the government to recover the cost of road maintenance. The net effect is that you receive a partial credit, not the full excise amount.

Light vehicles on public roads are generally not eligible because the fuel excise is intended to fund road infrastructure. However, if you use a light vehicle off-road, for example, a ute driving around a farm paddock or a worksite, that portion of fuel use can qualify. You'll need solid records, such as odometer readings, GPS data, or logbooks, to demonstrate the off-road versus on-road split.

How do you register for fuel tax credits?

Before you can claim, you need two separate registrations with the Australian Taxation Office (ATO): one for GST (goods and services tax) and one for fuel tax credits. You need to register for GST before you can register for fuel tax credits.

If your business has an annual turnover of $75,000 or more, you are required to register for GST. If your turnover is below this, you can choose to register voluntarily.

Follow these steps to get set up:

1. Register for GST

If you are not already registered, you can do so through the Australian Business Register (ABR) or your myGov account linked to the ATO. The registration process typically takes a few business days to complete, and you'll receive confirmation once your GST registration is active.

2. Add fuel tax credits to your registration

Once your GST registration is active, you can add fuel tax credits through the same ABR portal or your myGov account at any time. This is a separate registration that builds on your existing GST status, and there's no additional fee for registering for fuel tax credits.

3. Confirm your registrations are active

Check that both registrations are showing as active in your ATO online services account before you lodge your first business activity statement (BAS) with a claim. You can view your registration status and effective dates through the ABR or your myGov dashboard.

If you use a registered tax or BAS agent, they can manage these registrations on your behalf.

What are the current fuel tax credit rates?

Fuel tax credit rates are set by the ATO and are typically adjusted twice a year, usually on 1 February and 1 August, in line with CPI indexation. Rates vary based on the fuel type, when you acquired or used the fuel, and the activity or equipment that used the fuel.

Rates can also change outside this normal cycle. From 1 April 2026, the government temporarily reduced fuel excise under the National Fuel Security Plan, with reduced rates applying through at least 2 August 2026. If you're claiming fuel acquired during this period, don't rely on standard indexed figures — check the ATO's current rates page for the exact rate that applied on your acquisition date.

As a busy business owner, you don’t need to memorise these rates, but you do need to know where to find them and how to apply the right rate to each type of fuel use. Using an outdated rate or the wrong activity classification is one of the most common errors that triggers ATO queries.

Where to find rates

The ATO's online resources include:

• Rate tables showing the cents-per-litre credit for each fuel type and activity, updated every indexation period
• The fuel tax credit calculator, an interactive tool that lets you input your fuel type, litres, and activity to calculate your claim
• Guidance on eligible fuels and activities, describing the rules on what you can claim

When you're preparing your BAS, match the fuel acquisition or use date to the correct rate period. If the rate changed on 1 August and you're claiming for the July–September quarter, you'll need to split your claim between the 2 rate periods.

How to handle rate changes

Rate changes within a BAS period require you to split your eligible litres into separate buckets: one for the period before the rate change and one for the period after. For each bucket, apply the rate that was current at the time, then add the two subtotals together for your total credit claim.

For example (using illustrative rates to show the method — always confirm actual current rates on the ATO's site, especially given the temporary excise relief in effect this year), imagine you used 1,000 litres of diesel off-road in the July – September quarter, where the rate was 48.8 cents per litre from 1 July to 31 July, then increased to 49.6 cents per litre from 1 August onwards. You'd calculate:

• July litres (assume 300 litres) × $0.488 = $146.40
• August – September litres (assume 700 litres) × $0.496 = $347.20
• Total claim = $146.40 + $347.20 = $493.60

Keep a simple spreadsheet or use your accounting software to track acquisition dates and litres, so you can easily split claims when rates change. This level of detail also supports your record-keeping obligations if the ATO ever reviews your claim.

How do you work out and claim on your BAS?

Claiming fuel tax credits on your BAS is a multi-step process that starts with confirming your registrations and ends with lodging your statement and keeping your workings. The ATO expects you to have a clear audit trail from fuel purchase through to the credit claimed at label 7D on your BAS.

Here's the big-picture workflow:

Steps to calculate and claim

Follow these steps each BAS period to claim accurately and stay compliant:

1. Confirm your registrations. Make sure you're registered for both GST and fuel tax credits. You can check your registrations on the Australian Business Register or in your myGov account.
2. Capture tax invoices and fuel card statements. Collect all fuel purchase documents that show the date, supplier, fuel type, and litres acquired. Tax invoices are essential if you're claiming GST input tax credits as well, but for fuel tax credits you need to know the litres and the acquisition date.
3. Identify eligible use. Review how you used the fuel during the period. Separate on-road heavy vehicle use, off-road use, and auxiliary equipment use. If you have mixed use (for example, a vehicle used on-road and off-road), you'll need to apportion the litres.
4. Keep logs and records. Maintain odometer readings, hour-meter logs, GPS or telematics reports, job cards, or other evidence that shows where and how the fuel was used. This is critical for apportionment and audit defence.
5. Find the current fuel tax credit rates. Go to the ATO rates page and identify the rate that applies to each category of use and each date range within your BAS period.
6. Calculate eligible litres by activity. Multiply the litres in each category by the applicable rate. If rates changed mid-period, split the litres by date and apply the correct rate to each portion.
7. Enter the total at BAS label 7D. Add up all your fuel tax credit subtotals and enter the total dollar amount at label 7D (Fuel tax credits over the tax period) on your BAS. This credit will reduce the net amount you owe or increase your refund.
8. Lodge your BAS. Submit your BAS by the due date through your registered tax agent, the Business Portal, or your accounting software's online lodgement feature.
9. Retain your workings. Keep a copy of your fuel tax credit calculation workings, invoices, logs, and apportionment records for at least five years. The ATO can request these during a review or audit.

For many businesses, integrating fuel tax credit tracking into your accounting software streamlines this process. You can read more about calculating GST for your activity statements in this practical guide.

What records do you need to keep?

Fuel tax credit record-keeping is a legal requirement under fuel tax law. The ATO expects you to hold records that prove the amount of fuel you acquired, the date you acquired it, the business activity in which you used it, and how you calculated the credit you claimed.

Good record-keeping serves two purposes: it supports your BAS claims if the ATO asks questions, and it helps you track fuel use and costs so you can manage your business more effectively. Think of your records as both a compliance safeguard and a management tool.

What to keep and for how long

At a minimum, you need to retain:

• Fuel tax invoices and receipts showing the supplier, date, fuel type, and litres purchased
• Fuel card statements that break down each transaction by date, location, and litres
• Odometer or hour-meter logs that record the start and end readings for vehicles or equipment, along with notes on whether the use was on-road, off-road, or auxiliary
• GPS or telematics reports if you use electronic tracking to apportion on-road versus off-road use
• Job cards, timesheets, or project records that show which equipment was used on which site or task, helping you link fuel consumption to eligible activities
• Apportionment workings like, notes, or reports that explain how you split mixed-use fuel between eligible and ineligible categories
• Rate references such as a note or printout of the ATO fuel tax credit rates you applied for each period, so you can demonstrate you used the correct rate

The ATO requires you to keep these records for five years from the date you lodged the BAS on which you claimed the credit. If the ATO reviews or audits you, you need to provide these documents quickly in a clear, organised format.

Digital record-keeping is widely accepted and often easier to manage than paper files. You can scan or photograph receipts and invoices, store them in cloud folders, and link them to transactions in your accounting system. Many businesses use expense management tools or fleet management software to automate the capture of fuel data and odometer readings, reducing manual admin and improving accuracy.

If you operate a large fleet or use fuel across multiple sites, consider setting up a simple log template that drivers or operators complete each time they refuel. This log should capture the date, odometer or hour-meter reading, litres added, and a brief note on the type of use (on-road delivery, off-road earthmoving, auxiliary refrigeration, etc.). Consistency in logging makes the apportionment process much smoother at BAS time.

Tips to get your fuel tax credits right

Small errors in your fuel tax credit claims can lead to under-claiming, over-claiming, or ATO queries. Avoid these errors to help you make accurate fuel tax credit claims:

• Using the wrong rate period: Always match the fuel acquisition or use date to the rate that was current at that time. Don't assume the rate is the same as last quarter.
• Failing to split for mid-period rate changes: If the rate changed on 1 February or 1 August and your BAS period straddles that date, you must split your claim.
• Claiming for light vehicles on public roads: Light vehicles under 4.5 tonnes on public roads don't qualify, even if they're used 100% for business.
• Missing litre data or apportionment support: If you cannot show how many litres were used off-road versus on-road, the Australian Taxation Office may reduce or reject your claim. Keep logs and records.
• Not separating auxiliary fuel from propulsion: Fuel used to power auxiliary equipment (like a refrigeration unit) is eligible even when the vehicle is on a public road, but you need to measure or reasonably estimate that fuel separately from the fuel used to drive the vehicle.
• Weak documentation: Claiming without invoices, receipts, or logs is a red flag. The ATO expects you to substantiate every litre and every rate you apply.

If you're unsure about any aspect of your claim, consult your accountant or bookkeeper. Getting it right from the start saves time and stress later, and ensures you're claiming the full entitlement you're owed without crossing into ineligible territory.

Simplify fuel tax credits with Xero

Managing fuel tax credits doesn't have to be a tax-time headache. When you centralise your fuel invoices, receipts, and usage logs in one place, you can calculate your claims with confidence and keep an audit-ready trail without the paper shuffleCapture fuel expenses as they happen, tag them by eligible category, and store digital copies of supporting documents. That means less time hunting for receipts at BAS time and more time focusing on the work that drives your business forward.

Ready to try a cloud-based accounting service that simplifies fuel tax credits? Get one month free.

FAQs on fuel tax credits

This section answers common questions about claiming fuel tax credits, from eligibility and rates to record-keeping and BAS lodgement, helping you get the most from the scheme while staying compliant:

Are fuel tax credits considered assessable income?

Yes. Fuel tax credits count as assessable business income, so you need to include them in your income tax return under 'Assessable Government industry payments'. This means the credits reduce your BAS liability but are taxable in the year you receive them, so factor this into your tax planning..

How far back can you claim fuel tax credits?

You can claim fuel tax credits for up to four years from the date the fuel was acquired or used, as long as you haven't already claimed the credits and you meet all the eligibility requirements. In practice, most businesses claim on their regular BAS each quarter or month, so retrospective claims are rare. If you discover you missed a claim from a previous period, you can lodge an amended business activity statement (BAS) or request an adjustment through the Australian Taxation Office (ATO). Making fuel tax credits part of your standard BAS process helps you avoid needing these corrections.

Can you claim for fuel used to power auxiliary equipment on a truck?

Yes. Fuel used to power auxiliary equipment, such as a refrigeration unit, a concrete mixer drum, a hydraulic crane, or a tipper mechanism, is eligible for fuel tax credits even when the vehicle is travelling on a public road. The key is that the fuel must be used for the auxiliary function, not for propelling the vehicle. You'll need to measure or reasonably estimate how much fuel the auxiliary equipment consumes, separate from the fuel used to drive the truck. Many businesses use manufacturer specifications, hour-meter readings, or fuel flow meters to make this apportionment. Keep records of your method and calculations to support your claim.

How do you handle a rate change inside a quarter?

When the fuel tax credit rate changes on 1 February or 1 August and your BAS period covers both dates, split your eligible litres into two groups: fuel acquired or used before the rate change, and fuel acquired or used after the rate change. Apply the old rate to the first group and the new rate to the second group, then add the two amounts together for your total claim.