What Are Fuel Tax Credits?
When Australian businesses buy fuel, part of the price includes fuel excise — a tax collected at the pump. Eligible businesses can claim fuel tax credits (FTC) to recover some of that excise when the fuel is used in qualifying business activities. Unlike a tax deduction, which reduces taxable income, FTC is a direct offset that reduces the net amount you owe on your Business Activity Statement (BAS) — or increases your refund.
FTC is administered by the Australian Taxation Office (ATO). Rates are expressed in cents per litre for liquid fuels and cents per kilogram for some gaseous fuels. Rates differ by activity: fuel used in off-road machinery, agriculture, mining, and marine operations typically attracts a higher credit rate than fuel used in heavy vehicles travelling on public roads (where a road user charge component reduces the credit).
Indicative mid-2026 rates — verify on ATO before claiming. The ATO publishes updated rate tables — check the official fuel tax credits page for the exact figures that apply to your BAS period before you lodge.
The Fuel Tax Credit Formula
The calculation itself is straightforward:
- Fuel tax credit ($) = Quantity × Rate ÷ 100
- Quantity = litres (or kg for LPG and some gaseous fuels) of eligible fuel
- Rate = ATO cents per litre (or per kg) for your activity and fuel type
Example: A construction company uses 8,500 litres of diesel in off-road excavators and generators during a quarter. The ATO rate for that activity is 51.6 cents per litre. Credit = 8,500 × 51.6 ÷ 100 = $4,386. If they also used 2,000 litres of diesel in heavy on-road trucks at 20.5 cents per litre (after road user charge), that line adds 2,000 × 20.5 ÷ 100 = $410. Total FTC = $4,796 for the period (subject to eligibility and apportionment).
Eligible Activities and Common Exclusions
FTC eligibility depends on how fuel is used, not just that you are a business. Broad categories include:
- Off-road business use: Plant, equipment, generators, and machinery not travelling on public roads.
- Agriculture, forestry, and fishing: Eligible activities on land, in vehicles on private property, or in marine operations.
- Heavy on-road vehicles: Vehicles over 4.5 tonnes GVM travelling on public roads — at the reduced on-road rate.
- Marine and rail: Specific rules apply; check ATO guidance.
Common exclusions and reductions:
- Private or domestic use of fuel
- Light vehicles (cars, utes under 4.5 tonnes GVM) on public roads
- Fuel used in vehicles that do not meet environmental criteria (for some periods)
- Mixed use — you must apportion between eligible and ineligible use
Record-Keeping for BAS Claims
The ATO requires you to keep records that show you acquired the fuel, used it in an eligible activity, and applied the correct rate. Acceptable records include tax invoices, fuel card statements, logbooks, equipment hour meters, and allocation worksheets. For mixed-use fuel, document your apportionment method — for example, based on odometer readings, hour meters, or a reasonable estimate supported by evidence.
Fuel tax credits are reported on your BAS. If you report quarterly, calculate FTC for each fuel type and activity in that quarter. Annual reporters aggregate annually. Mistakes can trigger amended BAS lodgements and interest — which is why this calculator emphasises verifying rates on the ATO site before you lodge.
FTC vs GST on Fuel Purchases
Fuel tax credits and GST input tax credits are separate. When you buy fuel for business, you may be able to claim GST on the purchase (if you are GST-registered and the acquisition is creditable) and claim FTC on the excise component — but the rules interact and apportionment applies. FTC reduces your BAS liability in the fuel tax credits field; GST credits reduce GST payable on purchases. Do not double-count. If you are unsure, consult a registered BAS or tax agent.
Planning with This Calculator
Use this tool to estimate quarterly or annual FTC before cash-flow planning — for example, forecasting how much excise you will recover on a harvest season's diesel consumption, or comparing off-road vs on-road fleet costs. Add a second fuel line when you use both diesel in machinery and LPG in forklifts, each at different rates. Override presets with the exact cents-per-unit from the ATO table for your claim period.
For personal and fleet fuel cost estimates (not tax credits), see our Trip Fuel Cost Calculator, Commute Fuel Cost Calculator, and Generator Fuel Calculator. US and Canadian interstate carriers should use the IFTA Fuel Tax Calculator instead.