You can claim credits for the fuel tax (excise or customs duty) that is included in the price of the fuel you use in your business activities. However, some fuels and activities are not eligible for these fuel tax credits, including:
- Fuel used in light vehicles with a gross vehicle mass (GVM) of 4.5 tonnes or less that are traveling on public roads
- Aviation fuels
- Alternative fuels (Note: Fuel tax credits may be available for certain activities where alternative fuels are used.)
Why would a business want to register for fuel tax credits?
As a business owner, you might have to do numerous things to boost business growth. Many times, business owners forget to claim potential credits, like fuel tax credits. That’s where tax accountants come in. You can get in touch with accountants near your office by searching online for ‘small business accountant near me’. Fuel tax credits offer businesses a credit for the fuel tax, which is included in the fuel price used in:
- machinery
- plant
- equipment
- heavy vehicles
- light vehicles travelling on private roads
The amount you can claim depends on several factors, including the type of fuel used, how and when it’s used, and the specific activity involved. Fuel tax credit rates can vary frequently, sometimes even daily, so it’s important to check the current rates on the ATO website before lodging your Business Activity Statement (BAS). Keep in mind, not all fuels and uses are eligible. For example, fuel used in light vehicles (4.5 tonnes gross vehicle mass or less) when driven on public roads generally doesn’t qualify.
Who is eligible for the fuel tax credit?
To apply for a claim for fuel tax credit, you must meet the fuel tax credits eligibility criteria. You must be registered for:
- GST when you acquired the fuel
- Fuel tax credits when you file the claim.
You can claim fuel tax credits for eligible fuel you obtained, imported or manufactured and used in your business. If your business is already registered for GST, you will be able to add a registration for fuel tax credits without impacting your GST tax period, whether it is monthly, quarterly, or annual.
However, if you want to access your fuel tax credits more frequently, this can change your GST tax period and affect other reporting obligations. If you are not sure, you can consult with a tax return accountant for tax advice. Registered tax accountants or BAS agents can also help you with registration for fuel tax credits. If your business ceases or changes, you must cancel your registration.
How long do you have to claim fuel tax credits?
You will have some time limits for claiming fuel tax credits or adjusting and correcting mistakes. You must claim your fuel tax credits within 4 years of the due date of the earliest BAS in which you could have made your claim. If you fail to claim the fuel tax credits within that time period, you will no longer be able to claim them. You can also use the fuel tax credit calculator to check the amounts for your BAS up to 4 years ago.
Making adjustments and correcting errors
Making adjustments: If you have already claimed fuel tax credits based on your intended use of fuel, but then use it differently, you’ll need to adjust your BAS. When calculating the adjustment amount, apply the fuel tax credit rate that was in effect at the time of your original claim. Keep in mind that fuel tax credits are considered part of your business income and should be reported under ‘Assessable government industry payments’ on your tax return.
Correcting mistakes: If you find an error on a previous BAS, it’s important to correct it. There are specific rules and limits for making corrections, which depend on the timing of the error (time limits) and the amount involved (value limits).
Conclusion
Fuel tax credits can offer significant savings for businesses that use fuel in their operations, from machinery and heavy vehicles to certain private road vehicles. However, it’s crucial to stay informed about eligible fuels, activities, and fuel tax credit rates, as these can change. Ensuring that your business is registered for GST and fuel tax credits is the first step in accessing these savings.
To make sure you are maximising your credits, it’s wise to consult with Reliable Melbourne Accountants for guidance on registration, eligibility, and making adjustments.
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