Latest Fuel Tax Credit Rates for 2025: What Every Business Owner Needs to Know
Are you claiming all the Fuel Tax Credits your business is entitled to? Many Australian business owners are leaving money on the table by not fully understanding the fuel tax credit scheme. The Australian Taxation Office (ATO) updates Fuel Tax Credits rates twice yearly, with the most recent change occurring on 3 February 2025. These credits can significantly reduce your business expenses, especially if you use substantial amounts of fuel for business activities.
Understanding Fuel Tax Credits
Fuel Tax Credits provide a refund for the fuel tax, including excise or customs duty, that is included in the price of fuel when used for eligible business activities. These credits are designed to remove or reduce the impact of fuel tax on business and non-business activities that do not involve using public roads.
When you purchase fuel for your business, the price of fuel includes a fuel tax component. However, the government recognizes that not all taxable fuel is used on public roads, which is what the excise or customs duty was primarily designed to fund. If you use fuel in machinery, equipment, or vehicles off public roads, or on private roads, you may be eligible to claim fuel tax credits for the appropriate eligible fuel type.
To qualify for Fuel Tax Credits, your business must meet basic eligibility requirements. You need to have an Australian Business Number (ABN), be registered for Goods and Services Tax (GST), and use fuel for eligible business purposes. These credits are not automatic-you need to calculate and claim them on your Business Activity Statement (BAS) for each tax period.
Current Fuel Tax Credit Rates (February – June 2025)
The ATO updates Fuel Tax Credits rates in line with the Consumer Price Index (CPI). The most recent update, effective from 3 February 2025, uses a CPI indexation factor of 1.004. This means the current rate includes fuel tax increases from previous periods, so it is important to check the rates for the specific date the fuel was acquired, as fuel tax credit rates change regularly.
The rates you can claim depend on when you acquired the fuel, the eligible fuel type, and how it was used in your business activity. Claiming the correct amount on your Business Activity Statement BAS is essential for compliance and maximising your credit.
Rates for Heavy Vehicles on Public Roads
For businesses operating heavy vehicles, which are defined as those with a gross vehicle mass over 4.5 tonnes, on public roads, the current rate for fuel acquired from 3 February 2025 to 30 June 2025 is 20.3 cents per litre for liquid fuels such as diesel or petrol. This rate also applies to blended fuels like B5, B20, and E10. However, the rate is 0 cents per litre for E85, liquefied petroleum gas (LPG), Liquefied Natural Gas (LNG), and Compressed Natural Gas (CNG) because the road user charge exceeds the Fuel Tax Credits rate for those fuels.
The road user charge increases by 6% each year over a three-year period, rising from 28.8 cents per litre in 2023–24, to 30.5 cents per litre in 2024–25, and to 32.4 cents per litre in 2025–26. When the road user charge exceeds the Fuel Tax Credits rate, no credit is available for that fuel used in heavy vehicles on public roads.
Rates for Other Business Uses
For all other eligible business uses, including using fuel to power auxiliary equipment of heavy vehicles or for machinery and equipment off public roads, the rate is significantly higher. For liquid fuels such as diesel or petrol, the rate is 50.8 cents per litre. Blended fuels like B5, B20, and E10 also have a rate of 50.8 cents per litre. For E85, the rate is 21.73 cents per litre. LPG is 16.6 cents per litre, LNG or CNG is 34.8 cents per kilogram, and B100 is 15.2 cents per litre.
These rates apply when fuel is used for business activities such as operating auxiliary equipment, power passenger air conditioning, or other machinery that does not involve travel on public roads.
Eligible Vehicles and Equipment
It is important to understand which vehicles and equipment qualify for Fuel Tax Credits. The Australian Taxation Office considers a range of vehicles and equipment eligible for credits, including:
Heavy vehicles such as trucks, buses, and commercial vehicles that use eligible fuel types for business purposes on public roads may be eligible for a tax credit. Diesel vehicles are commonly used in these categories. When fuel is used to power auxiliary equipment, such as loading or unloading equipment, elevated work platforms, crane trucks, drilling equipment, or truck-blowers for dry goods, higher rates may apply.
Vehicles with passenger air conditioning powered by the engine, as well as those with specialized auxiliary equipment, often qualify for higher rates if the fuel is used to power that equipment rather than for road travel. This also applies to vehicles with power passenger air conditioning systems and other auxiliary equipment.
Light vehicles, defined as those under 4.5 tonnes gross vehicle mass, are generally not eligible for Fuel Tax Credits when travelling on public roads. However, if light vehicles are used off public roads or on private roads, and the fuel is used for eligible business activities, you may be able to claim your Fuel Tax Credits for that use.
Beyond Road Vehicles
Fuel Tax Credits are not limited to road vehicles. Credits can also be claimed for fuel used in generators, compressors, forklifts, bobcats, excavators, earthmoving equipment, pumps, irrigation systems, heating, lighting, and cooling systems. Any business machinery or equipment using an appropriate eligible fuel type may qualify for credits at the higher “other business uses” rate.
To avoid missing out on valuable fuel tax credits or making costly mistakes with your claims, read our article on Maximising Fuel Tax Credits for expert strategies, eligibility tips, and the latest rates to help your business save more in 2025
How to Calculate and Claim Your Fuel Tax Credits
Calculating Fuel Tax Credits may seem complex, but the ATO provides a Fuel Tax Credit calculator to help you determine what you can claim on your business activity statement. Before using the calculator, you need to know when the fuel was acquired, the eligible fuel type, how it was used in your business activity, and the quantity of fuel used for each purpose.
The ATO also offers a Fuel Tax Credit eligibility tool to help you check if you can claim Fuel Tax Credits for your specific business activities before you begin calculating amounts.
Record-Keeping Requirements
Accurate record keeping is essential for Fuel Tax Credit claims. You need to keep records showing the amount of fuel acquired, the date of acquisition, the business activity it was used in, and confirmation that the fuel was acquired for eligible business use. These records must be kept for at least five years after you lodge your BAS.
Time Limits for Claims
There is a strict time limit for making Fuel Tax Credit claims. You must claim your credits within four years of the due date of the earliest business activity statement in which you could have made your claim. If you do not claim within this period, you will no longer be eligible to claim those credits. For example, if you could have claimed credits for fuel acquired in March 2025 on your March 2025 quarterly BAS, which is due 28 April 2025, you have until 28 April 2029 to make that claim. properties and older properties can benefit, though the amount and types of deductions may vary.
Common Mistakes to Avoid
Many businesses miss out on the full benefits of Fuel Tax Credits due to common errors. Not separating fuel used for different purposes, such as on-road travel versus powering auxiliary equipment, can lead to incorrect claims. Using the wrong rate for the period the fuel was acquired, not claiming for all eligible fuel types and activities, and poor record keeping are frequent issues. Missing the four-year deadline for claims can also result in lost credits.
Simple steps like keeping separate records for different uses, using the ATO’s Fuel Tax Credit calculator, and checking the current rate for the date the fuel was acquired can help you avoid these mistakes and ensure your claim is correct.
Conclusion
Fuel Tax Credits represent a valuable opportunity for Australian businesses to reduce their operating costs. With the latest Fuel Tax Credit rates now in effect until 30 June 2025, now is the time to review your business’s fuel use and ensure you are claiming every credit you are entitled to.
By understanding the different rates, eligible vehicles and equipment, and proper calculation methods, you can maximise your credits while remaining compliant with ATO requirements. Even small credits can add up over time, leading to significant savings for your business.
