As heating oil prices continue to fluctuate unpredictably, businesses need to consider these costs when it comes time to prepare their yearly taxes. While diesel heating oil is comparatively inexpensive and easy to have delivered, business tax credits can make using it even more affordable. But not every business can claim heating oil for business tax credits.

Business tax credits generally credit the claimant with the costs incurred with the excise portion of fuel costs.

To begin with, it is important to note that the ATO allows for business tax credits to be claimed on not just diesel fuel for heating oil, but also a wide range of fuels including kerosene, petrol and even fuel blends. The rate that can be claimed will depend on the particular blend mix used, for example mixing with ethanol.

Additionally, claimants for any type of fuel credit need to be registered for both GST and fuel credits. There may also be a requirement for your diesel equipment to meet certain environmental emissions standards.

General tax credit guidelines

The ATO has made their guidelines to you need to do as a business to claim heating oil for business tax credits.

One use of this is when you are a heating oil company that is supplying heating oil for domestic use, but only if you are certain the application of this heating oil is for domestic heating purposes only. You cannot claim credits for businesses who are using heating oil that you supply, but businesses who are purchasing heating oil can claim their own credits.

To ensure that it is being used in a domestic setting, the ATO recommends that diesel fuel suppliers check the following:

1. The volume and frequency of the fuel being delivered - is it reasonable to expect that the quantity is for a regular household, and not the demands of a work site?
2. The location of the delivery - obviously a red flag will go up if heating oil is being sent to a business surrounded by heavy machinery.
3. The name belonging to the delivery address - most people do not live at a business address.

Further business fuel credit notes

Alternative fuels such as ethanol cannot be used to make fuel tax credit claims as they may already be the subject of a special grant or subsidy.

Distributors may not claim fuel tax credits based on the diesel oil sold for heating purposes, regardless if it is in a domestic or business location. It can only be claimed for diesel used.

Kerosene has its own rules. For example, the packager or kerosene can claim fuel tax credits, but only for packages of kerosene that are 20 litres or smaller that are not used in an internal combustion engine. Therefore, packagers of kerosene packs used for domestic heating can claim fuel tax credits.

Tax and fuel credits can be complex, but getting diesel fuel for heating oil doesn’t have to be. Contact Bulk Fuel Australia today to find out more about the range of diesel delivery options we can provide for your business.

As always please seek independent tax advice and this article is a guide only. Information was true and correct at time of publishing.