Fuel tax credits explained
- 12 February 2016
Australia runs on fuel. The Australian government, in recognition of the importance of fuel to the running of business and the health of the Australian economy, offers fuel tax credits in order to keep the cost of fuel in Australia at sustainable prices for companies that require it for their business.
Fuel tax credits are a credit back to the business that pays tax on fuel for specific purposes, including the fuel used in heavy vehicles, plants, equipment and machinery.
Why fuel tax credits?
As part of the Clean Energy Future projects, the Australian government put in place laws that were designed to encourage businesses to invest in cleaner energy use. The law, implemented in 2011, involved a Carbon Pricing Mechanism (CPM), which means that businesses that emit pollution have to pay for their carbon emissions.
The Carbon Pricing Mechanism has been designed to make the top 500 polluting businesses reduce their emissions. While the Australian government wanted to ensure that pollution is paid for to lock in a clean energy future, businesses that require fuel to operate are exempt from bearing the full penalty of this scheme. Therefore, these particular businesses are offered fuel tax credits in order to recover some of the costs of the scheme.
How to manage fuel tax credits
Fuel tax credits change regularly, so operators need to keep comprehensive records of fuel purchase and fuel usage. Operators can invest in bulk fuel delivery to help with this, as bulk fuel suppliers currently service a range of industries that help operators to maximise their fuel tax credits. The legislation is complex and constantly changing. While this can break some businesses, those that invest in bulk fuel delivery, including on-site refuelling options, may find that they reap greater benefits from the Carbon Pricing Mechanism.
Think outside the square
Fuel tax credits can be claimed for fuel used in power generators that generate power used in domestic environments. Fuel in Australia can be used to run a household, but not a recreation or hobby, such as caravanning or opal exploration, to be eligible for fuel tax credits.
Bulk Fuel Australia
Don't pay more than you have to for fuel. Bulk Fuel Australia is proud of its commitment to fuelling Australia. Call Bulk Fuel Australia to find out how we can help your business to take advantage of fuel tax credits.
Learn more about Fuel Tax Credits for business on the ATO website.
This article is just a guide only; always take appropriate financial and legal advice from your legal and finance professional.