Fuel tax credits: eligibility, rate indexation and the errors the ATO targets

Two registrations before you can claim

To claim fuel tax credits you must be registered for GST at the time you acquired the fuel, and registered for fuel tax credits when you lodge the claim. Both are required; neither is retrospective by default. The ATO states the requirement on its fuel tax credits eligibility page.

This is why wanting to claim fuel tax credits is itself listed by the ATO as a compulsory GST registration trigger, independent of the $75,000 turnover threshold. A small civil contractor, primary producer or plant operator with an off-road fleet may need to register for GST solely to access the credit. Our GST registration scope tool and the GST registration thresholds explainer cover that decision.

Credits are claimed on your business activity statement, at label 7D. Overclaims are corrected at label 7C.

The rates that apply in FY2026-27

Fuel tax credit rates depend on the date you acquired the fuel, not the date you used it or lodged. For fuel acquired from 3 August 2026, the rates published by the ATO for FY2026-27 are (checked August 2026):

For fuel acquired from 1 July 2026 to 2 August 2026, a different set applied: 20.2 cents per litre for liquid and B5/B20/E10 blended fuels used in heavy vehicles on public roads, and 36.6 cents per litre for all other business uses of those fuels; 15.690 cents per litre for E85, 12.0 cents per litre for LPG, 25.1 cents per kilogram for LNG or CNG and 13.4 cents per litre for B100 in other business uses.

The gap between the two heavy-vehicle rates is the road user charge. From 1 July to 2 August 2026 the road user charge was 16.4 cents per litre for liquid fuels and 21.9 cents per kilogram for gaseous fuel. From 3 August 2026 it is 32.4 cents per litre for liquid fuels and 43.2 cents per kilogram for gaseous fuel. The road user charge is subtracted from the excise rate, which is why the heavy-vehicle-on-road rate is so much lower than the off-road rate, and why gaseous fuels used in heavy vehicles on public roads attract a nil rate.

The all-other-business-uses rate also covers fuel used to power the auxiliary equipment of a heavy vehicle — refrigeration units, concrete agitators, tippers, elevated work platforms. Apportioning that auxiliary use correctly is one of the larger legitimate claim uplifts available to a transport operator, and one of the more common places to get the split wrong.

Why the rate changes more than once a year

Fuel tax credit rates are indexed in line with the consumer price index twice a year, in February and August. The rate that applied from 3 August 2026 reflects that August indexation. On top of the CPI cycle, the road user charge is set separately and can change independently, and one-off excise measures have moved rates outside the normal cycle in recent years — rates also changed from 1 April 2026.

The compliance consequence is direct: there is no such thing as "the" fuel tax credit rate for a financial year. A quarterly BAS period will routinely straddle a rate change. Any process that hardcodes a rate into a spreadsheet at the start of the year will produce a wrong claim by design. The ATO's own guidance is to use its fuel tax credit calculator each time you claim, and its published worked examples of errors are dominated by claimants applying a rate from the wrong period.

Put the February and August indexation dates into your compliance calendar alongside your BAS dates, and treat the rate as an input to be looked up rather than a constant.

Ineligible fuels and activities

Some fuels and uses attract no credit at all. The ATO's ineligible fuels and activities guidance lists them.

Ineligible fuels:

• Fuels with no excise or customs duty paid on them, such as non-transport gaseous fuels
• Aviation fuels — aviation gasoline and aviation kerosene
• Additives such as diesel exhaust fluid (AdBlue), which are not taxable fuels and carry no duty

Ineligible activities:

• Fuel used in light vehicles of 4.5 tonnes gross vehicle mass or less travelling on public roads — cars, small vans, taxis and ride-sourcing services
• Fuel used for private purposes, including in light vehicles such as utes
• Transport gaseous fuels used in a heavy vehicle over 4.5 tonnes GVM travelling on public roads
• Fuel acquired but not used because it was lost, stolen or otherwise disposed of
• Fuel on which no excise or customs duty was paid

The important carve-out runs the other way: fuel used in light vehicles travelling off public roads is claimable — on work sites, mine sites and private roads. A fleet of utes operating on a construction site or a farm is not automatically excluded; the exclusion is public-road travel. Apportioning between on-road and off-road use for light vehicles requires evidence, which is where these claims are usually won or lost.

Simplified methods for claims under $10,000

If you claim less than $10,000 in fuel tax credits each year, the ATO permits several simplifications, set out in its simplified fuel tax credits guidance.

• Basic method for heavy vehicles. Calculate credits for diesel used in heavy vehicles from the distance travelled on public roads and the eligible diesel acquired for the vehicle in the tax period. Available for diesel acquired on or after 1 October 2020.
• Use the rate that applies at the end of the BAS period. Where a rate change falls inside the period — as it does in February and August — total your litres and apply the rate current on the last day of the period, rather than splitting purchases across two rates. Available for BAS periods ending on or after 31 March 2016.
• Work out your litres from cost. Divide total fuel cost for the period by the average price of fuel for the period. Available for BAS periods ending on or after 31 March 2016.
• Simplified record keeping. Substantiate claims under $10,000 using contractor statements where fuel is deducted from amounts payable, financial institution statements showing only dollar amounts, point-of-sale dockets that do not itemise quantity, or fuel supplier statements or invoices showing only dollar amounts — provided you can show the quantity was used in the business, or reasonably demonstrate it from prior or later period records if a record is lost. This method is available for all past and future BAS periods.

These are elective. You can start or stop using them at any time, and using one does not commit you to the others.

Correcting errors: the limits that actually bind

An error occurs when the amount claimed on a BAS was not correct at the time it was lodged. Overclaims are debit errors; underclaims are credit errors. The ATO's fuel schemes error correction guidance sets the boundaries, and they are tighter than most claimants assume.

A debit error can be corrected on a later BAS only if it is within both a time limit and a value limit:

The time limit runs from when the error occurred, not when it was discovered. Outside those limits, you must amend the original period — and penalties and the general interest charge may apply. Multiple errors in a period are assessed individually to determine whether each can be corrected, and an error cannot be corrected more than once.

Credit errors are treated more generously: they can be corrected on a later BAS within the credit error time limits and the four-year period of review, being four years from the day after you lodged the BAS in which the error occurred. Credit errors are not subject to value limits.

Two hard stops apply:

• Once the ATO notifies you of an intended compliance activity, you generally cannot correct a related error on a later BAS. It must be corrected in the original period, and voluntary disclosure is usually in the claimant's interest.
• A debit error caused by recklessness or intentional disregard of the fuel tax law cannot be corrected on a later BAS at all. It must be dealt with by amending the original period, with penalties and interest.

Our penalty estimator frames the exposure where an amendment is unavoidable.

Records that survive an ATO review

Fuel tax credit claims are quantitative, and the review question is always the same: can you evidence the litres and the use. Build the file to answer it.

• Acquisition records showing quantity, date of acquisition and fuel type — the date of acquisition is what fixes the rate
• Use records tying fuel to eligible activities, including the on-road and off-road split for each vehicle class
• Auxiliary equipment apportionment, with the method documented and applied consistently
• The rate used for each period, with the source and date recorded, so a straddled rate change is visible on the face of the working papers
• Retention consistent with the seven-year records retention rule that applies across the tax system

Heavy vehicle operators should keep the fuel tax credit workbook alongside their chain of responsibility records: both depend on the same trip and vehicle data, and reconciling them is the fastest way to detect a distance figure that does not hold up.