How To Claim An Extra $25.80 in Fuel Tax Credits per 100 Litres of Fuel

*FTC rates in this article apply for the period 5 August 2019 to 31 January 2020 

 

Many businesses claim Fuel Tax Credits (FTC) on the vehicles they use in their day to day operations. FTC’s assist businesses by providing a credit on their BAS depending on the amount of eligible fuel used each period. FTC’s are essentially a discount on each litre of eligible fuel used in a business. The amount of the credit depends on the type of fuel and the type of vehicle. 

Most commonly businesses will claim Fuel Tax Credits using the standard rate of 16 cents per litre of eligible fuel used. But you may be entitled to a higher claim depending on your vehicles.  

 

If you have a heavy on road vehicle with auxiliary equipment attached to it you could be missing out on an extra credit of $28.50 per 100 litres of diesel. 

 

Did you know that you can claim Fuel Tax Credits on fuel used to power auxiliary equipment and the rate which is applied to that fuel is different to the basic on road rate? This applies to the following situations; 

  • Where you use gaseous or liquid fuels to power the equipment in your heavy vehicles, or 

  • Where the fuel used in powering the equipment was sourced from a separate fuel tank or the main tank used for the vehicle’s engine, or 

  • Where the auxiliary equipment may also take its power from the main engine. Often this will increase the fuel consumption of the engine.  

 

What types of vehicles use auxiliary power equipment? 

 

This equipment is generally unrelated to the vehicle’s travel on public roads. An example of this equipment includes: 

  • Refrigerator units on trucks transporting cold or frozen goods 

  • Air-conditioning on a bus or coach 

  • A concrete truck’s mixing barrel 

  • Garbage bin lifters 

  • Elevated work platforms 

As long as the equipment is used for completing your business tasks then you can claim these extra Fuel Tax Credits.  

 

How to claim the extra $25.80 Fuel Tax Credit per 100 litres? 

 

To calculate how much you can claim for fuel used to power auxiliary equipment, you need to apportion the fuel used. You should apportion the usage by how much fuel is used in; 

  • powering the auxiliary equipment 

  • how much fuel is used in travelling on public roads 

  • How much fuel is used off public roads and at work sites 

The extra effort required to record and calculate this usage is generally very worthwhile when considering the extra cash available when properly calculating Fuel Tax Credits. 

You can use any apportionment method you consider fair for your circumstances and business operations. But, if you do use the ATO simplified method, you will not need to do a separate calculation for any fuel used off public roads. The ATO simplified method takes some of the headache out of tracking and calculating FTCs by providing statutory percentages to rely on (for example 30% attributed to the fuel use by the drum on a concrete truck).  Here is a link to the ATO list of percentages for the simplified method: https://www.ato.gov.au/Business/Fuel-schemes/In-detail/Heavy-vehicles/?page=5#Methodsofworkingoutfuelconsumption_auxil 

By properly claiming the fuel use on auxiliary equipment, you will be eligible for the higher 41.8c/L rate on auxiliary fuel compared to the 16.0c/L allowed for the truck itself. This difference is 25.8c/L or $28.5 per 100L of fuel. 

 

Conclusion 

 

Any businesses which rely on trucks and heavy vehicles can obtain a substantial cash benefit by taking the time to calculate and claim Fuel Tax Credits correctly. 

If you are unsure on what you can claim or how much you can claim in Fuel Tax Credits you should talk to a trusted accountant. Link Advisors offers professional accounting services designed to help your business. Come have a chat with us.