Fuel Tax Credits Changed Again: Are You Using the Right Rate on Your BAS?
- Future Accounting
- 12 minutes ago
- 5 min read
A practical guide for farmers, transport operators, contractors and other fuel-intensive businesses after the August 2026 fuel-excise change.
Written By: Melissa Cunliffe
Why the August change matters for your next BAS
Fuel tax credits are easy to treat as a routine BAS calculation—until rates change inside the reporting period. Australia's temporary fuel-excise relief ended in early August 2026 and excise settings changed again. For businesses buying significant quantities of diesel or petrol, that means the acquisition date and the way fuel is used need to be checked carefully rather than simply copying the rate used on the previous BAS.
Fuel tax credit rates change regularly because they are linked to fuel excise settings and, for heavy vehicles travelling on public roads, the road user charge. The ATO therefore recommends checking the current business rates or using its fuel tax credit calculator when preparing a claim.
Do not use one headline rate for every litre
The correct fuel tax credit depends on the type of fuel, when it was acquired, the business activity and how it was used. Fuel used in eligible off-road activities can have a different rate from fuel used to propel a heavy vehicle on a public road.
Who should pay particular attention?
Farmers and agricultural contractors using tractors, harvesters, irrigation equipment, generators and other machinery.
Transport and logistics businesses operating heavy vehicles on public roads.
Earthmoving, civil construction, mining-support and quarrying businesses.
Builders and contractors operating eligible machinery, plant or generators.
Businesses with bulk fuel tanks, fuel cards or multiple fuel suppliers.
Any business that acquired significant fuel both before and after an August rate change.
The rate is determined by more than the price at the pump
A fuel tax credit is generally intended to provide a credit for fuel tax embedded in eligible fuel used in business activities. The amount is not simply a percentage of the invoice price. It is generally calculated by reference to eligible litres and the applicable cents-per-litre rate, with different treatment for different fuels and uses.
Five common areas where BAS claims go wrong
1. Using the latest rate for fuel bought earlier
Where the rate changes during a BAS period, fuel acquired before and after the change may need different rates. Keep invoices and acquisition dates so the claim can be split correctly.
2. Treating road and off-road use as the same
Eligible fuel used in off-road machinery can attract a different rate from fuel used to propel a heavy vehicle on a public road. A truck that also powers auxiliary equipment can create additional allocation questions.
3. Claiming fuel that is not eligible
Not all fuel use qualifies. Light vehicles on public roads, private use and certain fuels or activities can be excluded or treated differently. Eligibility should be checked before applying a rate.
4. Weak records for bulk fuel
A bulk tank can supply several pieces of equipment with different uses. Delivery invoices alone may not be enough to explain the final allocation. Usage logs, machine records, GPS/telematics or other reasonable methods may be required depending on the business.
5. Forgetting that the tax claim and business margin are separate
A correct fuel tax credit improves the tax outcome, but it does not compensate a business for every increase in diesel or petrol prices. Fuel-intensive businesses should also review customer pricing, surcharges and cash-flow forecasts.
An example: one BAS, two fuel-rate periods
Assume a civil contractor buys a bulk diesel delivery in late July and another delivery after the August rate change. Both purchases fall within the same quarterly BAS. If the business applies only the later rate to every litre, the claim may be wrong. The better process is to identify litres by acquisition date, determine how each parcel of fuel was used and then apply the appropriate ATO rate for that period and activity.
Farm businesses: separate machinery use from road use
Farm operations often have several fuel uses at once: tractors, harvesters, pumps, generators, utes and heavy trucks. A single fuel account can therefore contain litres that have different eligibility or rates. Businesses should ensure their bookkeeping and operational records allow those categories to be separated.
Transport businesses: road user charge changes matter
For eligible heavy vehicles travelling on public roads, the fuel tax credit is reduced by the road user charge. That means the headline excise rate is not the same as the credit available for road propulsion. Transport operators should use the ATO's current published rate and make sure the vehicle meets the relevant heavy-vehicle requirements.
A BAS-ready fuel tax credit checklist
Export all fuel invoices and fuel-card transactions for the BAS period.
Separate purchases by acquisition date where a rate changed during the period.
Identify fuel type and litres purchased.
Allocate eligible road, off-road, auxiliary-equipment and private/non-creditable use.
Use the ATO fuel tax credit calculator or current rate table rather than an old spreadsheet rate.
Reconcile the calculated credit back to the BAS workpapers and general ledger.
Keep the supporting methodology consistent and documented, especially for bulk tanks and mixed use.
Review fuel-driven margins and customer pricing separately from the BAS claim.
Can previous errors be corrected?
Potentially. The ATO provides mechanisms for fuel tax credit adjustments and corrections, but the correct approach depends on the type, amount and timing of the error and the applicable BAS correction rules. Businesses should avoid simply adding an unsupported catch-up amount to the next BAS.
Preserve, Protect, Prosper
At 3P's Future Accounting, we can review fuel tax credit calculations, reconcile mixed-use fuel and assess what higher fuel costs are doing to gross margins and working capital. That helps Protect the business from incorrect BAS claims, Preserve cash by capturing legitimate credits and Prosper by ensuring pricing still reflects the real cost of operating vehicles and machinery.
Frequently asked questions
What fuel tax credit rate should I use?
Use the ATO rate that applies to the fuel type, acquisition period and business use. Rates change regularly, so check the current ATO table or calculator each BAS period.
Which date matters when the rate changes?
The acquisition date is generally important for determining the applicable rate. Keep invoices and transaction records where a BAS period spans a rate change.
Can farmers claim fuel tax credits for diesel?
Many eligible off-road agricultural uses can qualify, but the rate and eligibility depend on the activity and fuel. Road use and private use need separate consideration.
Do trucks get the full fuel excise back?
Not generally for propulsion on public roads. The fuel tax credit for eligible heavy vehicles on public roads is reduced by the road user charge.
Can I use the same rate as last quarter?
Do not assume so. Fuel tax credit rates change regularly and may change within a BAS period.
Can an old claim be corrected?
In many cases there are adjustment or correction mechanisms, but the correct method depends on the facts and the relevant BAS correction rules.
Book a meeting with our team today to review your fuel tax credit position, discuss any historical claim concerns and make sure you're not leaving money on the table or exposing your business to avoidable compliance risks.
Disclaimer
This article does not constitute financial advice and is for general information only. It does not take into account any individual’s personal objectives, situation or needs, and is not intended as professional advice. Any similarity to an individual’s personal circumstances and the examples provided in this article is purely coincidental. Any person acting upon such information without receiving specific advice, does so entirely at their own risk.
Authorisation under an Australian Financial Services Licence (AFSL) is not required in the provision of this article and the author plus Future Accounting Group Pty Ltd is not acting in its capacity as an Australian Financial Services Licence holder
Liability limited by a scheme approved under professional standards legislation.
