Fuel Tax Credits: The Complete Guide for Australian Businesses and Operators

Updated 26 July 2026

Who can claim

Businesses registered for both GST and fuel tax credits can claim for taxable fuel (diesel, petrol and most blends) used in eligible activities:

• Machinery, plant and equipment: excavators, generators, pumps, harvesters, forklifts off public roads
• Heavy vehicles over 4.5 tonnes GVM travelling on public roads
• Vehicles of any size operating off public roads: farms, mine sites, construction sites, private roads
• Auxiliary equipment of heavy vehicles: refrigeration units, concrete agitators, truck-mounted cranes and blowers, claimed at the higher off-road rate even while the truck travels on public roads

Eligibility follows the use, not the industry. Transport, agriculture, construction, earthmoving and mining are the classic claimants, but a landscaper's mowers, a fishing operation, or a site generator all qualify for the off-road tier. The clean exclusions: fuel used in light vehicles (4.5 tonnes or under) travelling on public roads, fuel not used in the business, and aviation fuels, which sit outside the scheme entirely.

The two-tier rate structure

The credit equals the excise paid, minus, for heavy vehicles on public roads, the road user charge (RUC). That single subtraction creates the two tiers:

• Off-road and auxiliary use: the full excise rate per litre. Immediately before the 2026 relief measures, that was 52.6 cents per litre.
• Heavy vehicles on public roads: excise minus RUC. Before the relief measures: 52.6 minus a 32.4 cent RUC, leaving 20.2 cents per litre.

The same litre of diesel was worth more than two and a half times the credit in an excavator than in a truck on the highway, which is why the use split drives the entire claim. The excise rate normally indexes to CPI every February and August, and the RUC is set separately by transport ministers with its own increase schedule, so both tiers move at least twice a year even in an ordinary year.

The 2026 timeline: what applied when

2026 was not an ordinary year. A supply-driven fuel price spike prompted temporary excise relief, delivered in stages. The rate that applies to any claim is the rate on the date the fuel was acquired, so this table is the backbone of every 2026 BAS:

Two design features jump out of the table. First, the on-road heavy vehicle credit barely moved through the whole sequence: 20.2, then 20.6, then 20.2. The excise cut and the RUC suspension were engineered to roughly cancel inside the on-road FTC formula. Second, the off-road and auxiliary rate swung violently: 52.6 down to 20.6, partial recovery to 36.6, then back to the full rate. Everything an operator needed to understand about winners and losers in 2026 lives in those two facts.

The next scheduled RUC annual increase was also deferred by six months, so the reinstated RUC figure differs from a simple reversion; and August's CPI indexation lands on top of the restored excise. Do not work from remembered rates for anything in 2026: the ATO's fuel tax credit calculator carries every dated rate and is the authoritative source per BAS period.

Where the relief actually came from (and why your BAS barely moved)

This was the part most operators got wrong during the relief period, and it matters for reading your own numbers afterwards.

For heavy vehicles on public roads, the FTC went from 20.2 to 20.6 cents: less than half a cent of change through the biggest excise cut in decades. The relief never came through the BAS. It came at the bowser: roughly 32 cents per litre less excise in the pump price during the April to June window, plus about 3.2 cents less GST calculated on the lower excise-inclusive price, a combined saving around 35.2 cents per litre at purchase, with the terminal gate price passing the cut through within days (ACCC monitoring of the 2022 cut confirmed near-immediate wholesale pass-through, and 2026 behaved the same way).

In the July to 2 August window the same logic applies at smaller scale: roughly 16 cents per litre of excise relief at the pump plus the GST effect, with the on-road FTC back at 20.2 cents. From 3 August, both the bowser relief and the special FTC rates end together.

The lesson that survives the episode: whenever a government touches excise or the RUC, check both ends of the equation, the pump and the BAS, because they can move in opposite directions and roughly cancel, or not, depending on your fuel-use mix.

Transport operators: updating the fuel surcharge formula

Most Australian transport operators price fuel risk through a standard surcharge formula:

FSC = [(CFP − BFP) ÷ BFP] × Y

where CFP is the current fuel price (the AIP terminal gate price, less GST, less the government rebate, being the fuel tax credit), BFP is the base fuel price locked at contract inception, and Y is fuel operating cost as a percentage of total freight cost, typically around 25%.

Rate events touch the three components of CFP differently:

1. Terminal gate price: no action needed. The AIP TGP already reflects excise at the wholesale level and moves with it within days. Keep sourcing the weekly AIP diesel TGP for your city as normal.
2. GST: no action needed. The formula already nets GST off, and the GST amount tracks the price automatically.
3. Government rebate (FTC): manual update required. The rebate line in the formula is the on-road FTC rate, and it changes only when you change it. Through 2026 that meant: 20.2 to 1 April, 20.6 to 30 June, 20.2 to 2 August, then the new published rate from 3 August. An operator who left 20.2 in the formula all year was close to right by accident; an operator who guessed larger swings mispriced every consignment.

The discipline that makes this painless is a dated rate schedule maintained alongside the contract file: one line per rate window, updated each February and August and whenever government intervenes, feeding both the surcharge formula and the BAS claim from the same source.

Cold chain operators: the auxiliary rate is your exposure

Refrigerated transport runs on two claims at two rates: motive diesel in the truck at the on-road rate, and reefer diesel powering the refrigeration unit as auxiliary equipment at the full off-road rate with no RUC deduction. The ATO's Practical Compliance Guideline PCG 2016/11 provides the simplified method most operators use, allowing a flat 10% of total fuel to be claimed at the higher auxiliary rate without metering the reefer separately (other percentages apply to other auxiliary equipment types; concrete agitators and truck-mounted refrigeration each have published splits).

The 2026 sequence hit this claim hard. Before April the gap was 20.2 versus 52.6: reefer fuel earned two and a half times the credit. During the April to June window both rates converged at 20.6, a 32 cent per litre collapse in the auxiliary claim, offset for most operators by the bowser saving on total fuel. Through July to 2 August the auxiliary rate recovered to 36.6 while motive fuel sat at 20.2, and from 3 August the full gap returns. Cold chain BAS claims for 2026 therefore swing quarter to quarter for structural reasons, not errors, and the working papers should say so before a reviewer asks: litres split motive versus auxiliary (or the PCG 2016/11 percentage applied consistently), dated by rate window.

Apportionment: where claims are won and lost

Beyond the auxiliary split, three habits decide whether the claim is right:

• Litres by activity. Fuel into the excavator versus the linehaul truck versus the ute. Fuel card data and tank-issue logs by vehicle are the clean substantiation; percentage estimates are acceptable with a documented, periodically reviewed basis.
• The light vehicle trap. Diesel into utes and vans at or under 4.5 tonnes on public roads earns nothing, and sweeping all diesel into the claim is the most common over-claim the ATO adjusts.
• Simplified methods for small claimants. Businesses claiming less than $10,000 a year can use simplified approaches, including applying the rate current at the end of the BAS period rather than tracking mid-period rate changes, which in a year like 2026 is a genuine administrative mercy. If your claim is small, use them.

Claiming on the BAS, fixing the past, and the records that hold

Two money items sit behind the mechanics:

• The four-year back-claim. Credits can be claimed up to four years from the due date of the BAS in which they could first have been claimed. An eligible business that never registered, or systematically under-claimed the off-road tier, can recover the lot in one exercise: four years of an unclaimed $10,000-a-quarter entitlement is $160,000 sitting in old fuel invoices. We run this review as a standard step for new clients in fuel-heavy industries.
• Split-period records for 2026. Every 2026 BAS spanning a rate boundary needs fuel purchases split by acquisition date across the windows in the timeline table. A dated schedule of litres per window, built once, answers every question at lodgment and any question afterwards.

Records to hold for five years: litres, acquisition dates, and evidence of the vehicle or equipment and its use, sufficient to justify the split. Over-claims attract penalties and GIC, which since 1 July 2025 is no longer deductible, so the cost of a sloppy claim compounds in more ways than one.

The operator's rate-change checklist

Every February, August, and whenever government touches excise or the RUC:

• Pull the new rates from the ATO calculator; never carry forward from memory
• Update the dated rate schedule feeding the BAS claim and any surcharge formula
• Update the government rebate line in customer-facing surcharge formulas, and tell affected customers what changed and why, with the AIP TGP and the FTC rate cited; transparency here is cheap and disputes are not
• Confirm the auxiliary percentages still match the fleet (new reefer units, disposed agitators)
• Check whether the year's claims stayed under $10,000 and simplified methods apply
• Diarise the next change date

This article provides general information only, current at the date of publication, and does not constitute personal tax, legal or financial advice. Consider your circumstances or speak with us before acting. Liability limited by a scheme approved under Professional Standards Legislation.