Fuel tax credits in Australia: What fleet operators need to know

If you’re running a fleet, there’s a good chance you’re not claiming all the fuel tax credits (FTC) you could be entitled to. For many operators, the challenge isn’t eligibility; it’s navigating the rules and rate calculations with confidence.

At current diesel prices, often above 200 cents per litre in major cities, the dollar value involved isn’t small. A fleet consuming 200,000 litres annually in eligible off-road or non-road applications could be entitled to over $100,000 in fuel tax credits each year. That’s a meaningful saving for most fleet operators, not just  a rounding error.

Many operators still treat FTCs as too complicated or even something optional. In reality, it’s a standard entitlement that so many businesses either overlook or don’t claim correctly. For context on operational savings more broadly, see our small business fuel benefits.

What fuel tax credits are and why they exist

Fuel in Australia includes an excise duty, which functions as a road-user charge to fund road infrastructure. Businesses using fuel off public roads or in certain non-road applications are generally not intended to bear that charge in full. The FTC scheme means they can claim a credit for the excise portion of fuel used in eligible activities.

The current fuel excise sits at 52.6 cents per litre under standard conditions, with temporary variations applying in 2026 due to the fuel crisis sparked by the conflict in the Middle East.

FTCs aren’t a separate payment or rebate. They’re claimed through the Business Activity Statement (BAS) and reduce a business’s tax liability or increase its refund.

The scheme is administered by the ATO and has been running in various forms since 2006. It’s well established but it’s commonly underused because the eligibility rules can be complicated.

For businesses also thinking about broader operational efficiency, FTC planning commonly sits alongside tools such as corporate fleet solutions.

Who is eligible: The business eligibility tests

Eligibility depends on two things: the type of business and how the fuel is used.

Business eligibility:

• The business must be registered for GST
• It must be carrying on an enterprise (sole traders, companies, partnerships, trusts, and not-for-profits may all qualify)
• There is no minimum fleet size or turnover requirement

When assessing your eligibility, how the fuel is used matters far more than the type of business you operate or what vehicles you own.

Common eligible uses include:

• Off-road use in machinery, plant, or equipment
• Heavy vehicles over 4.5 tonnes GVM on public roads
• Fuel used on private roads or internal sites
• Use in vessels, aircraft, rail, and stationary equipment

Common ineligible uses include:

• Light vehicles under 4.5 tonnes GVM travelling on public roads (most utes, vans, and cars)
• Private fuel use, even in a business vehicle
• Most standard passenger vehicle travel on public roads

Eligible vs ineligible uses: fleet operator examples

Every fleet is different, but these are some of the most common situations where FTC apply:

• Heavy vehicles (over 4.5 tonnes GVM) on public roads
• Machinery operating off-road (excavators, forklifts, loaders)
• Agricultural equipment (tractors, harvesters, irrigation pumps)
• Generators, compressors, and stationary plant
• Marine vessels used for commercial operations
• Rail and industrial transport equipment
• Vehicles operating on private roads or sites

Likewise, there are some situations where FTC would not apply:

• Light commercial vehicles (utes, vans, cars) on public roads
• Personal or private fuel use
• LPG used in standard on-road light vehicles (a separate scheme applies)
• Non-business fuel consumption

Fleets will often operate across both categories. For example, a heavy vehicle may spend time on public roads and on private sites. In these cases, only the eligible portion can be claimed and the ATO requires accurate records that demonstrate that split.

Current fuel tax credit rates and how they apply

FTC rates aren’t fixed. They vary according to the fuel type, how it’s used, and when it was purchased. They’re indexed twice every year and can change with government policy decisions.

Off-road and non-road use reflects the full excise component. Rates for heavy vehicles on public roads are calculated as fuel excise minus the road user charge, which changes depending on current policy settings.

Fuel excise was temporarily reduced to 20.6 cents per litre From 1 April to 30 June 2026, with the road user charge reduced to zero. This temporarily aligned on-road and off-road FTC rates.

It’s also worth remembering that the applicable rate is based on the date the fuel was acquired and not the date the BAS is lodged.

Rates are indexed on the first Monday of February and the first Monday of August each year. Always check current rates via the ATO before lodging.

Businesses claiming under $10,000 annually can use simplified calculation methods. Larger claims must use exact acquisition-based rates.

How to claim fuel tax credits (step by step)

Businesses can generally back-claim FTCs for up to four years, so missed claims from prior periods are often recoverable.

Step 1: Confirm GST registration. Only GST-registered businesses can claim FTCs.

Step 2: Identify eligible fuel use. Separate fuel by vehicle type, usage type (on-road vs off-road), and whether the activity qualifies.

Step 3: Calculate the credit by multiplying eligible litres by the applicable FTC rate. The ATO’s calculator is available to help with this.

Step 4: Lodge on the BAS. Report FTCs at label 7D.

Step 5: Maintain records. You need fuel invoices, volume and purchase details, evidence of eligible use, and vehicle logs where applicable. Records must be kept for five years.

How fleet cards simplify your FTC record-keeping

Accurate FTC claims require detailed fuel data across vehicles and usage types. Paper receipts and manual tracking make this difficult to manage at any meaningful scale.

Fleet cards consolidate transactions into a single monthly itemised invoice, including date, volume, location, and vehicle assignment. That structure directly supports FTC record-keeping requirements and simplifies BAS preparation.

While fleet cards don’t affect your eligibility, they can make record-keeping much easier. For operators also looking at fuel cost and card options, FleetCard’s fuel savings calculator and compare fuel cards page can help assess what is available.

Common mistakes to avoid

It can seem like a lot to navigate, especially if you’re claiming for the first time. However, perhaps the most costly mistake isn’t claiming at all. Here are some other pitfalls to avoid:

• Claiming for light vehicles that do not qualify
• Using incorrect FTC rates during changeover periods
• Missing back-claim opportunities for prior years
• Inadequate record-keeping that does not separate eligible and ineligible use
• Assuming all fuel in the fleet qualifies
• Confusing GST credits with FTC claims

Which industries see the most benefit

Transport and logistics, agriculture, mining and resources, construction, marine and fishing, manufacturing and warehousing, and local government fleets all tend to have high proportions of eligible fuel use. FTCs often represent a significant annual cost recovery for these industries.

ATO fuel response payment plan (April to June 2026)

As part of the National Fuel Security Plan announced on 30 March 2026, the ATO introduced a temporary support arrangement for eligible businesses experiencing fuel-related cost pressure.

The plan allowed up to 36 monthly instalments and temporary remission of General Interest Charge for qualifying applicants. Eligibility required demonstrated financial impact from fuel costs and an existing tax debt. Businesses should seek professional advice before applying.

Round up

Start by confirming your eligibility, keeping accurate records, and make sure your claims align with ATO requirements.

For operators also looking at broader cost management, FleetCard Classic, EV fleet solutions, and fleet road assistance can support fleet operations alongside FTC optimisation.