Five tips to avoid common fuel tax credit mistakes

The Tax Office has issued advice regarding fuel tax credits after it noticed some errors creeping into recent activity statements — also reminding businesses that rates can change regularly (and have done so recently) and that this can be a common source of the mistakes being made.

For those businesses eligible to claim fuel tax credits, remember as well that from July 1, 2013, rates used in calculations should be those that applied when the fuel was acquired. However one exception is fuel used in heavy vehicles travelling on a public road, where the correct rate will be that which was in effect at the beginning of the tax period covered by the business activity statement (BAS).

The following tips can help you get your claim right, but of course ask for our guidance to follow these tips correctly or should other questions arise.

Use the right rates. As mentioned, fuel tax credit rates can change on a regular basis, so it’s important to make sure you use the correct rate. A good habit to get into would be to check up on the rates, or ask us to, before lodging each BAS.

Ensure that your fuel is the right sort. Fuel type and usage will influence your eligibility, as there are some exceptions to what you can claim. A common mistake is to claim fuel tax credits for fuel you use for private purposes or for travelling on a public road in vehicles with a gross vehicle mass (GVM) of 4.5 tonnes or less.

Keep those records. Make sure that accurate records are kept of fuel purchases and how that fuel is used in your business. This is even more important now that fuel tax credit rates are apt to change on a regular basis. Your records should show:

  • the date the fuel was acquired
  • the type of fuel you acquired
  • the quantity of fuel
  • how you apportioned the fuel for different activities, and
  • the business activities you use it in, such as if it is for on-road or off-road activities.

Do your sums and check them. Make sure you use the quantity of fuel when calculating your fuel tax credits. The Tax Office said a common mistake is claiming fuel tax credits based on the cost of the fuel instead of the quantity of fuel multiplied by the relevant rate.

Work out your fuel tax credits using this formula:

Quantity of eligible fuel x Correct fuel tax credit rate = Fuel tax credits

Write this amount, in whole dollars, at label 7D on your BAS (and it’s a good idea to keep records of your calculations).

Read over your contracts. The wording of contracts that involve supplying fuel can affect who can claim credits. If a contract has not been reviewed for some time, check that provisions dealing with fuel supply or use reflect the current regime — or have us read over your contracts for you.

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