As part of the 2022/23 Federal Budget, the government announced a measure to temporarily halve the fuel excise rate. The measure will be in place from 30 March 2022 to 28 September 2022. Whilst this measure will provide benefits to the average Australian household, we would like to highlight the subsequent changes to Fuel Tax Credits (FTC) entitlement for businesses over the six-month period that the fuel excise rate has been halved.
In general, a GST-registered business is entitled to claim FTCs on eligible uses of most types of fuels purchased. This includes fuel used by vehicles and certain non-vehicle uses, such as for plant and machinery. Some fuels and activities are not eligible for a FTC claim, including fuel used by vehicles weighing 4.5 tonnes or less travelling on public roads and aviation fuel. For example, a business cannot claim FTCs on fuel used by a car weighing less than 4.5 tonnes and travelling on public roads. However, an FTC may be claimed on fuel used by such vehicles when off a public road.
After receiving the benefit of the FTC, the remainder of the fuel excise borne by businesses is known as the Road User Charge (RUC). The FTC entitlement available to businesses and therefore, amount of RUC borne by them depends on how the fuel is used. There are two categories of fuel use for FTC purposes, being:
- Vehicles >4.5 tonnes used on public roads; and
- All other eligible business uses.
Changes to FTC Rates
Please see the below tables illustrating the changes to FTC rates and subsequent RUC borne by businesses (based on the main types of fuel used), in light of the temporary halving of the fuel excise rates from 30 March 2022:
Rates for fuel acquired from 1 February 2022 to 29 March 2022 | ||||||
Vehicles >4.5 tonnes and used on public roads | All other eligible business uses | |||||
Eligible fuel type | Unit | Fuel Excise Rate | FTC | RUC | FTC | RUC |
Liquid fuels – for example, diesel or petrol | cents per litre | 44.2 | 17.8 | 26.4 | 44.2 | 0 |
Liquefied petroleum gas (LPG) | cents per litre | 14.4 | 0 | 14.4 | 14.4 | 0 |
Liquefied natural gas (LNG) or compressed natural gas (CNG) | cents per kilogram | 30.3 | 0 | 30.3 | 30.3 | 0 |
Rates for fuel acquired from 30 March 2022 | ||||||
Vehicles >4.5 tonnes and used on public roads | All other eligible business uses | |||||
Eligible fuel type | Unit | Fuel Excise Rate | FTC | RUC | FTC | RUC |
Liquid fuels – for example, diesel or petrol | cents per litre | 22.1 | 0.0 | 22.1 | 22.1 | 0.0 |
Liquefied petroleum gas (LPG) | cents per litre | 7.2 | 0.0 | 7.2 | 7.2 | 0.0 |
Liquefied natural gas (LNG) or compressed natural gas (CNG) | cents per kilogram | 15.2 | 0.0 | 15.2 | 15.15 | 0.0 |
Therefore, we note the following changes to FTC rates and RUC during the period 30 March 2022 to 28 September 2022:
Vehicles >4.5 tonnes, on-public road use
Prior to 30 March 2022, businesses using petrol/diesel in vehicles >4.5 tonnes and used on public roads received a FTC of 17.8 cents/litre and therefore, a RUC of 26.4 cents/litre. From 30 March 2022, the FTC is reduced to nil and businesses will have a RUC of 22.1 cents/litre after the halving of fuel excise.
No FTC is available for other types of fuels. Therefore, the RUC will be equivalent to the fuel excise rate.
All other eligible business use
Prior to 30 March 2022, the FTC rate for all other eligible business fuel uses was equivalent to the fuel excise rate, therefore, leaving a nil RUC. Post 30 March 2022, the FTC rates will remain equivalent to the reduced FTC rates, therefore, the RUC for all other eligible business fuel uses will remain at nil.
Business Activity Statement (BAS) Preparation
Given the change in FTC rates takes place from 30 March 2022, it will impact the last two days of the 31 March 2022 BAS and all other BASs up to the period 28 September 2022. The relevant FTC rate to apply is determined on the day you acquire the fuel, to match the fuel excise rate applied. Therefore, it is important to identify fuel acquired between 30 March 2022 – 28 September 2022, as the FTC rates are significantly different.
If you require any assistance with working out your FTC rate or entitlement, please don’t hesitate to contact your Hall Chadwick QLD advisor.
