Fuel tax credits refund the excise built into fuel your business uses in heavy vehicles over 4.5 tonnes, machinery and equipment, and light vehicles travelling off public roads or on private roads. Fuel used in light vehicles on public roads is not eligible. You must be registered for GST and fuel tax credits, and you claim on your BAS.
Key takeaways
- Fuel used in light vehicles of 4.5 tonnes GVM or less travelling on public roads is not eligible for fuel tax credits.
- From 3 August 2026 the fuel tax credit rate for liquid fuels is 21.3 cents per litre for heavy vehicles travelling on public roads and 53.7 cents per litre for all other business uses.
- Fuel tax credit rates are indexed each February and August in line with CPI; the indexation factor from 3 August 2026 was 1.020.
- Businesses claiming less than $10,000 in fuel tax credits a year can use the ATO’s simplified calculation and record-keeping methods.
- Fuel tax credit records must be kept for five years, and the credit is claimed on your BAS at label 7D.
What is a fuel tax credit, in plain terms?
Fuel tax — excise or customs duty — is already built into the price you pay at the pump. A fuel tax credit hands some of it back when that fuel is used in a business activity that is not driving a light vehicle on a public road.
The ATO lists the eligible uses as machinery, plant, equipment, heavy vehicles, and light vehicles travelling off public roads or on private roads. That is the whole scheme in one sentence.
It is not a deduction. You claim it on your business activity statement, the same form your GST credits go on, and it comes back as a dollar amount rather than a reduction in taxable income.
To claim at all, you must be registered for GST at the time you acquired the fuel, and registered for fuel tax credits when you lodge.
Adding a fuel tax credit registration when you are already registered for GST does not change your GST tax period. Choosing to claim more frequently does — and that can drag other reporting dates with it.
Does a fleet of utes qualify?
For the driving between jobs, usually not. This is the single biggest misunderstanding among small fleets.
The ATO excludes fuel used in light vehicles of 4.5 tonnes gross vehicle mass or less travelling on public roads — a car, a small van, a taxi, a ride-sourcing vehicle. A ute doing the run from the depot to a client’s site on sealed public roads sits squarely inside that exclusion, and so does any private use.
Off public roads is a different answer entirely. The ATO states you can claim for fuel used in business activities in light vehicles travelling off public roads, such as work sites and mining sites, and on private roads.
So the practical test is not what the vehicle is. It is where the fuel was burned:
- Ute or van on a public road — not eligible
- Ute or van on a work site, mine site or private road — eligible
- Heavy vehicle over 4.5 tonnes GVM on a public road — eligible, at the lower road transport rate
- Heavy vehicle idling, loading or unloading in a depot, warehouse or car park — eligible, at the higher rate
- Machinery, plant and equipment — eligible
If your fleet is four utes doing suburban runs, there may be nothing here for you at all, and that is a fine answer to reach in ten minutes. If you run a truck over 4.5 tonnes, or vehicles that spend real hours on private ground, there probably is something. Our guide to what changes when a truck tops 4.5 tonnes covers the other obligations that arrive with crossing that line.
What are the current rates?
Rates depend on the fuel and on the activity. You must use the rate that applied on the date you acquired the fuel — not the date you lodge.
| Fuel acquired from 3 August 2026 | Heavy vehicle on public roads | All other business uses |
|---|---|---|
| Diesel or petrol | 21.3 c/L | 53.7 c/L |
| Blended B5, B20, E10 | 21.3 c/L | 53.7 c/L |
| Blended E85 | 0 | 23.015 c/L |
| LPG (duty paid) | 0 | 17.5 c/L |
| LNG or CNG (duty paid) | 0 | 36.8 c/kg |
| B100 | 0 | 19.7 c/L |
The gap between those two columns is the road user charge. From 3 August 2026 it is set at 32.4 cents per litre for liquid fuels and 43.2 cents per kilogram for gaseous fuels, and it is taken off the full rate for heavy vehicles travelling on public roads. That is why a litre burned idling in your yard is worth more than the same litre burned on the highway.
Why did the rate change on 3 August 2026?
Fuel tax credit rates are indexed twice a year, in February and August, in line with the consumer price index. The CPI indexation factor for rates from 3 August 2026 was 1.020.
This August was messier than a routine indexation, because two temporary excise reductions had just run their course:
- 1 April to 30 June 2026 — excise and excise equivalent customs duty on petrol, diesel and all other fuel products (except aviation fuels) reduced by 60.9%, with the road user charge set to 0.0 cents
- 1 July to 2 August 2026 — the same duties reduced by 30.4% of the full rate, with the road user charge at 16.4 cents per litre for liquid fuels
- From 3 August 2026 — the rates in the table above
For liquid fuels, the all-other-business-uses rate was 36.6 cents per litre during that July window and 53.7 cents from 3 August. If your BAS period straddles those dates, fuel bought in September is worth considerably more per litre than fuel bought in July.
How do you work it out without a spreadsheet nightmare?
If you claim less than $10,000 in fuel tax credits a year — which covers most small fleets — the ATO offers simplified methods, and you can use one, some or all of them.
The most useful for a small operator is the rule that lets you use the rate that applies at the end of the BAS period. Instead of splitting your fuel purchases either side of the 3 August change and running two rates, you total your litres for the period and apply the rate current on the last day. It is available for all BAS periods ending on or after 31 March 2016.
There is a companion method for when you only have dollar totals rather than litres: total cost of fuel purchased divided by the average price of fuel for the period.
For diesel in heavy vehicles, the basic method for heavy vehicles splits on-road from off-road use using two numbers — kilometres travelled on public roads, and litres of eligible diesel acquired for the vehicle. You can use your actual public-road kilometres, or take a derived figure of 98.4% of total kilometres travelled. It applies to diesel acquired on or after 1 October 2020, and if you use it you cannot use another apportionment method.
| Rigid truck, gross weight | Accepted litres per km |
|---|---|
| 4.5 to 12 tonnes | 0.18 |
| Over 12 to 16.5 tonnes | 0.23 |
| Over 16.5 to 24 tonnes | 0.28 |
| Over 24 to 30 tonnes | 0.32 |
| Over 30 tonnes | 0.35 |
Two more simplifications apply no matter how much you claim. Heavy vehicles on the ATO’s list of vehicles used mainly off public roads can claim all their fuel at the all-other-business-uses rate. And fuel powering auxiliary equipment can be apportioned using a percentage the ATO has already set.
What does the ATO want on file?
Records are where claims fall over. The ATO requires records that show the amount of fuel acquired and used in your business along with your calculations, in writing — electronic or paper — in English, and kept for five years, with some records needing to be kept longer.
Its own list of acceptable evidence names odometer readings, GPS data, fleet tracking telematics data, route distances, logbooks, engine hours and fuel usage reports as the ways to separate eligible from ineligible use. For the fuel itself: tax invoices, receipts, fuel card statements, fuel supplier statements and bank statements.
Under the $10,000 threshold the bar drops. The ATO will accept contractor statements, financial institution statements, point-of-sale dockets where the litres are not itemised or not legible, and fuel supplier statements showing only a dollar amount — provided you can show the fuel was used in your business during the period.
If you cannot support your claims with adequate records, you may have to repay all or part of the credits, and may incur penalties and interest.
None of this is a special project. It is ordinary fleet admin, done as it happens instead of reconstructed at 8pm on the day the BAS is due. Axlerun keeps fuel records and receipts against each vehicle on the free Drive plan — first three vehicles free forever — and the Cruise plan adds an automatic GPS logbook, so the on-road and off-road split is captured while it happens. The features page has the detail. A spreadsheet and a shoebox of dockets is still a legitimate answer; it just costs you an evening a quarter, and the same discipline that makes an ATO-ready logbook work without paper is what makes a fuel tax credit claim defensible.
How do you actually lodge it?
You claim on your BAS, and it comes down to two labels:
- Label 7D — your fuel tax credit amount for the period, plus any adjustment that increases it. Nothing to report? The ATO wants a 0 here, not a blank.
- Label 7C — any adjustment that decreases your fuel tax credit amount.
Fuel tax credits can only be claimed on a BAS. They cannot go on an annual GST return, and if you pay GST by instalments, registering for fuel tax credits switches you to a quarterly BAS.
Missed some periods? You generally have four years to claim a credit you have not claimed before, counted from the day after the BAS for that period was due. You must use the rate that applied when you acquired the fuel, which is exactly why the 3 August 2026 change matters for back claims as well as current ones.
Only one entity can claim fuel tax credits on a given lot of fuel.
That one matters if you run vehicles under a hire arrangement or a service contract. Settle which party acquired and used the fuel before either of you claims it.
The ATO’s own eligibility tool and fuel tax credit calculator are free and kept current with every rate change. Run them before you decide the scheme is not worth the trouble — then take the numbers to your accountant, who can tell you how they apply to your structure.
Frequently asked questions
Can I claim fuel tax credits on a work ute?
Not for travel on public roads. The ATO excludes fuel used in light vehicles of 4.5 tonnes GVM or less travelling on public roads, and excludes private use outright. You can claim for fuel used in business activities in light vehicles travelling off public roads, such as work sites and mining sites, and on private roads.
What is the fuel tax credit rate for diesel right now?
For diesel acquired from 3 August 2026, the rate is 21.3 cents per litre when used in a heavy vehicle travelling on public roads, and 53.7 cents per litre for all other business uses. Rates change in February and August, so check the ATO rate that applied on the date you acquired the fuel.
Do I need to register for anything before I claim?
Yes. You must be registered for GST at the time you acquired the fuel, and registered for fuel tax credits when you lodge the claim. Adding a fuel tax credit registration to an existing GST registration does not change your GST tax period, though choosing to claim more frequently will.
How far back can I claim fuel tax credits?
Generally four years. The four years runs from the day after you were required to lodge the BAS for the tax period in which you acquired the fuel. If you claim late, you must use the fuel tax credit rate that applied when the fuel was acquired, not the current rate.
What records does the ATO want for a fuel tax credit claim?
Records showing the fuel acquired and used in your business plus your calculations, in writing, in English, kept five years. That means tax invoices, receipts, fuel card and bank statements for the fuel, and odometer readings, GPS data, telematics data or logbooks to separate eligible from ineligible use.
Can I claim fuel tax credits on AdBlue?
No. The ATO treats additives such as diesel exhaust fluids as not being taxable fuels, because no excise or customs duty has been paid on them. Aviation fuels are also excluded, as is fuel you acquired but did not use because it was lost, stolen or otherwise disposed of.
Sources
- 1.Fuel tax credits – business — Australian Taxation Office
- 2.Fuel tax credit rates – business — Australian Taxation Office
- 3.Fuel tax credit rates from 1 July 2026 to 30 June 2027 — Australian Taxation Office
- 4.Fuel tax credits – eligibility — Australian Taxation Office
- 5.Ineligible fuels and activities — Australian Taxation Office
- 6.Fuel tax credits – registering — Australian Taxation Office
- 7.Simplified fuel tax credits — Australian Taxation Office
- 8.Basic method for heavy vehicles — Australian Taxation Office
- 9.Records you need to keep — Australian Taxation Office
- 10.Completing your business activity statement — Australian Taxation Office
- 11.Fuel tax credits – claiming — Australian Taxation Office
- 12.Fuel tax credit tools — Australian Taxation Office
Axlerun is fleet software, not a tax agent. Rates and rules change — confirm anything that affects your return with your accountant or the ATO.
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