Fuel Tax Credit
A credit for businesses that use fuel in heavy vehicles, machinery, equipment, or other eligible business activities.
Fuel tax credits allow eligible businesses to claim a credit for the fuel tax (excise or customs duty) included in the price of fuel used in business activities. The credit rates vary depending on the type of fuel, the business activity, and whether the vehicle travels on public roads. Credits are claimed through your Business Activity Statement (BAS).
The main eligible activities include: operating heavy vehicles (over 4.5 tonnes GVM) on public roads, using fuel in machinery, plant, or equipment for business (e.g., generators, forklifts, farm equipment), and using fuel in light vehicles for off-road business purposes. Light vehicles (under 4.5 tonnes) used on public roads are generally not eligible, as the fuel excise is intended to fund road infrastructure.
Fuel tax credit rates change regularly (usually twice a year, in February and August) in line with fuel excise indexation. For 2025-26, the rate for heavy vehicles on public roads is approximately 19 cents per litre for diesel, while the off-road rate is higher (around 50 cents per litre) because no road-user charge applies. You must keep records of fuel purchased (receipts or fuel supplier statements) and how it was used to substantiate your claims.
How it works
Fuel tax credits exist because fuel excise is baked into the price of every litre you buy, and that excise is meant to fund public roads. When a business uses fuel off public roads — in machinery, generators, or farm equipment — or in a heavy vehicle over 4.5 tonnes GVM travelling on public roads, it isn't getting the road benefit that justifies the excise, so the ATO refunds part or all of it. The credit rate depends on the fuel type, the specific business activity, and whether the vehicle stays off-road or travels on public roads.
In practice, the credit shows up as a line item on your Business Activity Statement, claimed alongside your GST reporting for the same period. Tradies, transport operators, and farmers are the most common claimants — a business running a delivery truck or a fleet of generators works out its eligible litres for the period and applies the current rate to work out the credit, then reports it through the BAS.
Light vehicles under 4.5 tonnes used on public roads generally don't qualify, because the road-user charge effectively cancels out the credit for that use — a common mistake is claiming for a ute's everyday driving. Rates also change roughly twice a year, in February and August, in line with excise indexation, so a rate you used last BAS period may already be out of date. Businesses that mix eligible and ineligible fuel use need to apportion their claim and keep records showing how each batch of fuel was actually used.
Example: claiming fuel tax credits for a delivery truck
Suppose your business runs a heavy delivery truck (over 4.5 tonnes) on public roads and uses 2,000 litres of diesel in a BAS quarter. At the 2025-26 heavy-vehicle public-road rate of around 19 cents per litre, the fuel tax credit works out to about $380 for the quarter, claimed on the BAS alongside your GST reporting.
If the same business also runs a generator on a work site using 500 litres of diesel, that fuel qualifies for the higher off-road rate of about 50 cents per litre, because no road-user charge applies to it — a credit of roughly $250. Keeping the on-road and off-road litres separate, with receipts showing how each batch was used, is what lets you claim both rates correctly on the same BAS.
Related Terms
Business Activity Statement (BAS)
A form lodged with the ATO to report and pay GST, PAYG withholding, PAYG instalments, and other business tax obligations.
Goods and Services Tax (GST)
A 10% broad-based consumption tax applied to most goods, services, and other items sold or consumed in Australia.
Input Tax Credit
A credit for GST included in the price of goods and services purchased for business use, offsetting GST collected on sales.
Sole Trader
An individual who runs a business in their own name, reporting business income and expenses in their personal tax return.
Australian Business Number (ABN)
A unique 11-digit number identifying a business entity to government and the community.