For any business that runs heavy vehicles or fuel-powered equipment, fuel is one of the largest operating costs. Fuel tax credits are one of the most effective ways to recover part of that cost, yet many eligible fleets either under-claim or miss out altogether, simply because the rules can seem complicated.
This guide explains what fuel tax credits are, whether your fleet is eligible, how the rates work, and how to make an accurate claim. It is written for Australian fleet operators, and while it is not tax advice, it will help you understand the scheme and where connected fleet data can make claiming simpler and more accurate. For the official detail and current rates, we link to the Australian Taxation Office (ATO) throughout.
In this guide:
What are fuel tax credits?
Fuel tax credits give businesses a credit for the fuel tax, the excise or customs duty, that is already included in the price of the fuel they buy and use in eligible business activities. In effect, the scheme refunds some or all of that embedded tax, reducing the real cost of fuel for the vehicles and equipment that qualify.
The credit is administered by the ATO and claimed through your Business Activity Statement (BAS), in the same way you claim GST credits. The amount you can claim depends on three things: the type of fuel, the business activity it is used in, and the date you acquired it. Because those variables change the rate, and because rates are updated regularly, it is worth understanding the mechanics before you claim. Fuel tax credits are one of several ways connected fleet management can turn everyday operational data into real cost recovery.
Is your fleet eligible for fuel tax credits?
To claim fuel tax credits, your business must be registered for both GST and fuel tax credits, and the fuel must be used in an eligible business activity. Eligibility is determined mainly by the type of vehicle or equipment and where it is used.
Fuel used in the following is generally eligible:
- Heavy vehicles over 4.5 tonnes gross vehicle mass (GVM) travelling on public roads (though the rate is reduced, see below).
- Machinery, plant and equipment, such as generators, excavators, tractors and other off-road plant.
- Heavy and light vehicles operating off public roads, for example on mine sites, farms, construction sites, ports and private property.
- Auxiliary equipment on heavy vehicles, such as refrigeration units, concrete agitators or tipping gear.
Fuel used in the following is generally not eligible:
- Light vehicles of 4.5 tonnes GVM or less travelling on public roads (for example, cars, utes and small vans on ordinary roads).
- Fuel that has been lost, stolen, or used for private purposes, or fuel already claimed.
If you are unsure, the ATO provides an eligibility tool, and it is always worth confirming your specific circumstances with the ATO or a registered tax or BAS agent. Industries that most commonly claim include transport and logistics, agriculture, construction, mining and manufacturing.
On-road vs off-road: why the distinction matters
The single most important factor in most fleet fuel tax credit claims is whether fuel is used on or off public roads, because the two attract very different rates.
Fuel used in heavy vehicles travelling on public roads attracts a reduced credit. This is because the road user charge, an amount set to recover heavy vehicles' share of road maintenance costs, is subtracted from the full fuel excise. Fuel used off public roads, in machinery, on private sites, or in auxiliary equipment, generally attracts the full rate, because the road user charge does not apply.
The ATO defines a public road as any road available for use, or generally accessible as of right, by members of the public. Off-road locations are everywhere else the public does not have a right of access, such as mine sites, quarries, farms, construction sites, ports, loading docks and private depots. Note that an unsealed road is not automatically off-road. Because the off-road portion is worth more, accurately measuring how much of each vehicle's fuel is used off public roads is where many fleets either gain or lose money, and where vehicle tracking data becomes valuable.
How fuel tax credit rates work
Fuel tax credit rates are set by the ATO and expressed in cents per litre (or cents per kilogram for gaseous fuels). Rather than a single rate, there is a matrix of rates that depends on:
- The fuel type (for example diesel, petrol, LPG, LNG or blended fuels).
- The activity, in particular whether the fuel is used in a heavy vehicle on a public road or off-road.
- The date the fuel was acquired, because rates are indexed and change during the year.
Rates are usually adjusted twice a year, generally on 1 February and 1 August, in line with the consumer price index, and the road user charge can change too. Because of this, we have deliberately not listed specific rates here: a figure published today could be out of date within months. Always use the current figures from the ATO fuel tax credit rates page, and the ATO's fuel tax credit calculator, for the exact period in which you acquired the fuel.
How to claim fuel tax credits
Fuel tax credits are claimed on your BAS. The process, in outline, is:
- Register. Make sure your business is registered for GST and for fuel tax credits with the ATO. Fuel tax credit registration is added to your existing GST registration.
- Work out your eligible fuel. For each BAS period, calculate the quantity of eligible fuel used, separated by activity type (for example, on-road heavy vehicle use versus off-road use).
- Apply the correct rate. Use the ATO rate that applied when you acquired the fuel, for each fuel type and activity, then multiply litres by the rate.
- Claim on your BAS. Enter the total at the fuel tax credit label on your BAS. The credit reduces your overall BAS liability or increases your refund.
Keeping clear records, separating business from private use, and on-road from off-road use, is essential, both to claim the full amount you are entitled to and to support your figures if the ATO ever reviews them.
Backdating a claim: the four-year rule
If your business has been eligible but has not been claiming fuel tax credits, or has been under-claiming, you may be able to make a backdated claim. Generally, you can claim fuel tax credits going back up to four years. The four-year period starts from the day after you were due to lodge the BAS for the tax period in which you acquired the fuel.
For a backdated claim, you must use the rate that applied at the time the fuel was acquired, not today's rate, and you need records to support the fuel type, quantity and on-road or off-road split for each period. Many businesses struggle to reconstruct accurate historical records, which is one reason robust, automated usage data is so useful: it can help establish a defensible pattern of off-road use for past periods.
How telematics improves the accuracy of your claim
The hardest part of a fuel tax credit claim is usually working out, accurately, how much of each vehicle's fuel is used off public roads, since that portion is worth the most. Many businesses fall back on a single standard percentage applied to the whole fleet, because it is the simplest method. But a rough estimate often understates off-road use, which means leaving money unclaimed, or overstates it, which creates compliance risk.
This is where connected fleet technology helps. By recording where and how each vehicle moves, telematics can map on-road and off-road usage precisely, rather than relying on an assumption. That means a more accurate apportionment of eligible fuel, a stronger evidence base if your claim is reviewed, and, for many fleets, a larger and more defensible credit. The same data that helps you run a safer, more efficient fleet can also help you claim what you are genuinely entitled to.
At MICHELIN Connected Fleet, we help Australian operators turn everyday fleet data into better decisions, from vehicle maintenance to route efficiency and compliance. If you would like to understand how connected fleet data could support a more accurate fuel tax credit claim, then be sure to make an enquiry into our services today.
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