Fuel tax credit rates changed on 1 July 2025. This guide breaks down what businesses can claim and how to keep records for accurate BAS lodgements.
Fuel tax credits are an essential benefit for many Australian businesses, helping them recover some of the costs associated with fuel excise. From 1 July 2025, the Australian Taxation Office (ATO) updated the fuel tax credit rates, affecting claims lodged on BAS from this date onward.
If your business uses fuel for eligible activities, such as operating heavy machinery, trucks, or off-road equipment—it’s crucial to understand the new rates, how they apply to you, and what documentation is required.
What Are Fuel Tax Credits?
Fuel tax credits provide eligible businesses with a rebate for the fuel tax (excise) included in the price of fuel used in business operations. These credits apply to:
- Diesel or petrol used in heavy vehicles (above 4.5 tonnes GVM)
- Fuel used in off-road machinery and equipment
- Fuel used for non-transport activities (e.g., generators or farming equipment)
The credit amount varies depending on how and where the fuel is used, the type of fuel, and whether the vehicle is used on public roads.
What’s Changed from 1 July 2025?
The ATO updates fuel tax credit rates twice a year—in February and August in line with the CPI. As of 1 July 2025, new rates apply to eligible fuel use, including:
- Liquid fuels (like petrol and diesel) used in off-road and on-road business operations
- Gaseous fuels like LPG or CNG
- Biodiesel and renewable diesel
The updated rates are indexed based on fuel excise rates and may change due to inflation or policy shifts.
To ensure accurate claims, businesses must reference the specific rate applicable to the fuel use type and date. For example:
- Diesel used in construction machinery may be eligible for a higher credit than diesel used in public road transport.
- Heavy vehicles used off-road often attract full credit, while on-road use might only receive a partial credit (or none if not eligible).
Refer to the ATO’s fuel tax credit calculator or get in touch with Cotchy for tailored advice.
How to Claim Fuel Tax Credits
Fuel tax credits are typically claimed through your Business Activity Statement (BAS). The process includes:
- Identifying the type of fuel used
- Determining the use of that fuel (e.g., off-road, heavy vehicle, auxiliary power)
- Referring to the correct rate from the ATO’s updated tables
- Recording the litres used during the period
- Calculating the claim amount and including it in your BAS
Keep in mind that the ATO may disallow incorrect claims if the wrong rate or purpose is listed.
Recordkeeping Requirements for Fuel Tax Credits
The ATO requires detailed and accurate records to substantiate any fuel tax credit claims. You should retain:
- Fuel invoices or receipts
- Equipment or vehicle logs (e.g., logbooks)
- Usage calculations or estimates
- Evidence of business purpose (e.g., delivery jobs or construction work)
- Records for five years
If you’re claiming for mixed-use vehicles or machinery, apportionment may be required, and you’ll need to show how you calculated business versus private use.
Industries That Commonly Claim Fuel Tax Credits
Many sectors benefit from fuel tax credits. Common examples include:
- Construction: Machinery such as excavators, graders, or cranes
- Agriculture: Tractors, harvesters, and irrigation pumps
- Transport: Long-haul trucks operating off-road or using auxiliary equipment
- Mining & Quarrying: Heavy earth-moving equipment
- Manufacturing: Industrial generators and forklifts
If your business operates in one of these sectors and you’re not claiming fuel tax credits, it could be time to reassess.
Are You Eligible? A Quick Checklist
Use this simple checklist to see if your business might qualify for fuel tax credits:
- You purchase fuel for business use
- You have vehicles/machinery that meet ATO eligibility criteria
- Your usage falls into approved categories (e.g., off-road, auxiliary)
- You retain proper records and fuel receipts
- You lodge regular BAS reports
You can check if you are eligible to claim using the ATO eligibility tool.
Need help ticking all the boxes? That’s where Cotchy comes in.
Common Mistakes When Claiming
Claiming fuel tax credits can seem simple—but many businesses get tripped up by:
- Using outdated ATO rates
- Claiming for ineligible vehicles (e.g., light commercial on-road use)
- Failing to keep logbooks or fuel receipts
- Incorrectly estimating fuel apportionment
- Not adjusting claims when vehicle usage changes
Avoid these errors by keeping your systems updated and working with a trusted advisor.
Fuel Tax Credits and BAS Lodgement
When preparing your BAS, ensure the fuel tax credit amount appears under label 7D. Your BAS software should support this, but manual entry is still common.
If you’re behind on BAS lodgements, you may miss out on backdated claims. The ATO generally allows fuel tax credit claims for up to 4 years, so it’s worth reviewing prior activity for unclaimed entitlements.
Talk to Cotchy About Fuel Tax Credit Rates
Whether you’re unsure about the updated rates, or need help with BAS lodgements, Cotchy is here to help.
We work with business owners in construction, farming, logistics, and more to maximise fuel tax credit claims and reduce the risk of costly errors.
Need help with fuel tax credit rates?
Click here to contact the team at Cotchy today to ensure you’re making accurate and maximised claims for the fuel tax credit rates.
FAQ’s
Q1: What are fuel tax credits?
Fuel tax credits allow businesses to claim back the fuel excise paid on eligible business-related fuel use, like for machinery or heavy vehicles.
Q2: When did the new fuel tax credit rates start?
The updated rates came into effect on 1 July 2025 and apply to fuel used from that date onward.
Q3: Who can claim fuel tax credits?
Businesses using fuel for eligible activities such as construction, farming, manufacturing, or operating heavy vehicles may be able to claim.
Q4: What records are needed to claim fuel tax credits?
You need fuel receipts, logbooks or usage records, and details of the activity the fuel supported to substantiate claims.