Did you know that you can save a lot with fuel tax credits? But a simple mistake on your Business Activity Statement can get you into trouble. Don’t worry if you have made a mistake. Knowing how to correct an error can help you stay compliant, avoid penalties, and save money. In this blog post, you will learn the steps for correcting mistakes in fuel tax credits.
What are Fuel Tax Credits?
Businesses are provided with a credit for the fuel tax that is included in the cost of fuel used in:
- Machinery
- Heavy vehicles
- Plant
- Light vehicles travelling off public roads or on private roads.
The amount may vary depending on what fuel you use, when you obtain the fuel, and the activity you use it in. The fuel tax credit rates also change daily, so make sure to check the rates before filing the business activity statement (BAS). Some activities and fuels don’t qualify, including fuel you use in vehicles of 4.5 tonnes gross vehicle mass or less, travelling on public roads. When it comes to BAS lodgment or income tax return lodgment, you may think of choosing a BAS agent and a tax agent. Before hiring one, make sure you know the difference between the professionals. To get detailed information, you can check out our blog on: Tax Agent vs BAS Agent.
When is an Adjustment Required?
You need to make an adjustment when you have claimed fuel tax credits, depending on your intention to use the fuel in a specific way, but you use it differently. This can lead to a change in your fuel tax credit entitlement.
When an Error Occurs
An error occurs when the fuel tax credit amount claimed on your BAS was not correct when you lodged it, due to a mistake, such as credits for ineligible fuel or transcription errors. If you didn’t make the necessary adjustment in the reporting period when you became aware of the need to adjust, it is considered an error. If you think that you have made a mistake on an earlier BAS, then you are required to make a correction. You must work out the amount that has been either:
- Over claimed (you received more fuel tax credits than you were eligible for), or
- Under claimed (you received fewer fuel tax credits than you were eligible for, for instance, you used a lower rate than you were liable to).
You can also ask tax accountants to help you claim fuel tax credits accurately without making any mistakes. For this, you can also search online for ‘accountant for small business near me’.
What Types of Records Do You Need to Keep?
To work out your fuel tax credits accurately, you must have complete and accurate records. As soon as you start your business activity, keep accurate records, as they can help you calculate and claim accurately. You can engage bookkeepers in Melbourne to get accurate records. Your records must:
- Show the amount of fuel obtained and used in your business and calculations
- Be in writing, either on paper or electronically
- Be in English or must be translated into English
- Be kept for at least five years, and sometimes, some records need to be kept for more than five years.
If you are claiming less than $10,000 in fuel tax credits every year, you are liable to use the simplified approach to keep records and calculate your claim. It’s essential to keep an accurate financial record to accurately claim all the fuel tax credits you are entitled to. If your records don’t support your claims, you may need to repay all or part of the fuel tax credits you have obtained. Penalties and interest charges can also be imposed.
You are required to keep tax invoices to show when you obtained the fuel, and copies of contracts to show the activities that the fuel was used in. Additionally, you must have GPS data if using GPS in a heavy vehicle that runs on and off a public road.
Conclusion
Now, you know when you need to adjust and when you need to correct an error in your fuel tax credit. To get help understanding fuel tax credits, you can reach out to Reliable Melbourne Accountants.