What are ATO Fuel Tax Credits? (UPDATED JUNE 2020)
BY MATTHEW PEARSON - TECH WRITER, TELEMATICS ADVOCATE AND FTC EXPERT
LAST UPDATED 25 JUNE 2020
Which Activities Qualify for ATO Fuel Tax Credits?
You can claim ATO fuel tax credits when you use fuel in your business activities in machinery, plant, equipment and heavy vehicles. The ATO fuel tax credit rate depends on how the fuel is used.
Not Eligible for Fuel Tax Credits
You cannot claim fuel use in light vehicles of 4.5 tonne gross vehicle mass or less, travelling on public roads.
Eligible for Fuel Tax Credits at 16.5 cents/litre (*rate valid until 30 June 2020)
Public roads are roads that are available for use by the general public. They include toll roads, bus lanes and so on. You can claim fuel tax credits for fuel you use in a heavy vehicle on public roads.
Eligible for Fuel Tax Credits at 42.3 cents/litre (*rate valid until 30 June 2020)
You can claim ATO fuel tax credits for uses off public roads. For example, for use in mines sites, private roads, site access roads, construction sites, farms and so on. Some heavy vehicles are considered as being always used off public roads, even if they sometimes use public roads. Examples include tractors, graders, combine harvesters, fertiliser spreaders, wheeled bulldozers, forklifts, wheeled excavators, front end loaders, backhoe loaders, and graders.
You can claim ATO fuel tax credits for fuels used in auxiliary equipment in your heavy vehicles. These are equipment and mechanisms unrelated to a vehicle’s travel on public roads. Examples include truck refrigeration units, the mixing barrels of concrete trucks, and garbage bin lifters
ATO Fuel tax credit rates change from time to time, so before claiming you need to check not only the category but also the current rate.
How to Claim ATO Fuel Tax Credits?
You must be registered for both GST and fuel tax credits before you can make a claim. You can register electronically through the Australia Business Register at abr.gov.au, or if you already have an ABN, you can phone the ATO’s automated service on 13 72 26 or 13 28 66. When you call you will need your ABN and TFN.
Keep records showing the date, quantity and type of fuel you acquire, how you use that fuel in your business activities and how you calculate your claim. This process can be automated by using telematics systems (see below).
Claim ATO fuel tax credits on your Business Activity Statement. To determine if you are eligible for fuel tax credits and what rate you can claim, use the fuel tax credit eligibility tool.
If you claim less than $10,000 in fuel tax credits each year, there are various simplified methods that you can use. There is an ATO fuel tax credits calculation worksheet here.
ATO fuel tax credits are considered as business income so you need to include them in your tax return.
Many Organisations Underclaim their ATO Fuel Tax Credits
Many organisations underclaim their ATO fuel tax credits, because they don’t the data information to assemble a detailed claim.
A detailed claim often requires a manual and error-prone process of information gathering from a lot of difference sources including driver logs, fuel records, and others.
Organisations typically use the low 16.5c/litre claim rate for all their heavy vehicles’ fuel purchases to avoid this burden. They are likely underclaiming their tax credits, as off-road ATO fuel tax credits are worth over 2.5 times on-road credits,
It’s normally better to use software such as a telematics system for high value fuel tax claims. These systems can help you track exactly how the fuel was used so you can make the maximum possible claim. They also minimise the administration effort.
You can make Retrospective Fuel Tax Credit Claims
You can claim ATO fuel tax credits within four years of the date you were required to lodge the Business Activity Statement (this is not considered to be a mistake or adjustment). Retrospective claims must use the rates applicable when the fuel was purchased. A retrospective claim can be based on a current consistent six month pattern of fuel use, ie, historical use data may not be required. In some cases, making a retrospective claim has led to large one-off payments.
Telematics Systems help you claim the maximum ATO Fuel Tax Credits
Telematics systems capture detailed data about what a vehicle is doing. You can prove when it’s been on or off public roads, when it’s been using auxiliary equipment, and so on. With this data, organisations can claim ATO fuel tax credits at the 42.3c/litre rate for –
- heavy vehicles auxiliary equipment fuel usage
- all vehicles offroad
- idle offroad for heavy vehicles
- Auxiliary equipment fuel usage
This is a 2.5 times better rebate. To see the impact, use the interactive rebate estimator below. You can use last year’s claim value, and adjust the slider to reflect the amount of fuel at the higher claim rate.
Interactive Fuel Tax Credit Calculator
Telematics systems enable you to establish a consistent pattern of business usage. The ATO allows taxpayers to use this pattern to make a retrospective claim of up to four years of under-claimed ATO fuel tax credits. (This is also shown in the calculator.)
How do Telematics Systems Calculate ATO Fuel Tax Credits?
- The telematics system has a map of the Australian public road network. It normally assumes the road is 120m wide, so any vehicle use within that range is considered to be on public roads. Adjustments can be made to the map by both the telematics system administrator and their customers. For example, to exclude private premises that are within the map’s definition of the public road. These adjustments must be approved, then they are included in the map for all users. Temporary adjustments (with a date range) can also be made, for example in the case of a temporary road closure or construction site.
- The customer creates a record for each vehicle in the telematics system. Details typically include registration number, vehicle type, fuel type, vehicle mass, idle fuel burn rate, and, if applicable, auxiliary equipment types, power methods and fuel burn rates.
- A device is installed in each vehicle. It records data including ongoing GPS location, whether auxiliary equipment is in use, and other relevant data
- Data is transmitted in real time from the device to the FMS via telecom network. If the device is out of range the data is stored until the signal is restored
- Actual fuel acquisition for each vehicle can be recorded manually, via file upload, or via interface from the fuel vendors
- FMS users can track the activities of the vehicle including location, engine status, auxiliary equipment status and so on.
- Trip data is shown for individual trips and erroneous data can be corrected or deleted
- Automated alerts can be established to help identify erroneous data
- Reports are created that include registration number, vehicle type, auxiliary equipment, travel percentage on and off road, off road idling time, and auxiliary equipment running time
- Summary reports include litres of fuel used for different types of travel, idling and auxiliary equipment used, within a tax period
- These summary reports can be used to claim ATO fuel tax credits
Which Telematics Systems can help you claim ATO Fuel Tax Credits?
The following telematics systems can help you claim Fuel Tax Credits –
ATO Class Rulings
An ATO Class Ruling means that a telematics system has been approved to create records for calculating fuel use. If you use a system that has an ATO Class Ruling, the tax law must be applied in the way it is described in the ruling. It means that you are protected from paying any underpaid tax, penalty or interest if the ruling is incorrect.
Benefits of Telematics Systems for ATO Fuel Tax Credit Calculations
- You can automate your claim for fuel use for both powered vehicles and auxiliary equipment
- You will not underclaim or overclaim. You will get every dollar owed to you
- Your claims can be backdated by up to four years if you can show a pattern of consistent fuel use. This can mean significant one-time returns. You can backdate claims even if you have already made a claim at the lower rate.
- You will reduce admin effort on making ATO fuel tax credit claims
- You can more accurately claim ATO fuel tax credits for offroad fuel use, which are over 2.5 times more valuable than on-road credits
- You can set up geofences to ensure your claim is the maximum allowed
Additional Benefit of using FMS with ATO Class Ruling –
- The tax law must be applied as described in the ruling. You will be protected from paying any underpaid tax, penalty or interest if the ruling is incorrect.
ATO fuel tax credits are the excise tax that was paid on taxable fuel, then returned to the taxpayer in the form of tax credits when the fuel was used for specific business purposes.
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