Fuel tax credits – have you been underclaiming?

With claims for fuel tax credits being less than budgeted Government spending, now is a good time to review whether you have underclaimed your fuel tax credit refunds.

Fuel tax credits provide farmers with a credit for fuel taxes (excise or customs duty) that is included in the price of the fuel where the fuel is used in their farming business. Not all fuel types or farming activities are eligible, however the majority will be eligible.

To assist those eligible farmers with claiming fuel tax credits, the ATO have issued a series of practical compliance guidelines. One of those guidelines helpfully states that they will ignore the public road usage of fertilizer spreaders, combine harvesters and tractors.  This ensures that credits for fuels used by those items are no longer reduced by the road user charge when travelling on public roads between farm locations.

Other heavy vehicles travelling on public roads are generally still subject to the road user charge, thereby reducing the fuel tax credit available. However, the fuel used in auxiliary equipment commonly associated with those vehicles may still be eligible for the full credit.  This requires an apportionment of the fuel used by such equipment, e.g. tipping equipment.  To assist with claims, the ATO have issued their accepted apportionment methodology that farmers can use to calculate the fuel used by such auxiliary equipment.

It is also important to calculate any fuel tax credits using the correct fuel tax rate when including them on your BAS.  This will depend on the particular fuel type, the particular activity in which the fuel is used and the date you are entitled to the claim.  Please remember the fuel tax credit rates change regularly and often more than once in a financial year. Your Phoenix software can assist you with tracking and calculating available credits.

The above is a short selection of the more recent updates in the fuel tax credit area.  Farmers are encouraged to seek advice from their tax advisor and review their entitlement to fuel tax credits.  If you have underclaimed in earlier years there may still be an opportunity to amend those claims and receive a refund.

 

William Laird

Director, Business Advisory

RSM Australia Pty Ltd. Liability limited by a scheme approved under Professional Standards Legislation