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Does the running of your business require you to spend money on fuel for vehicles like plant equipment, heavy vehicles or even light vehicles travelling off public roads? If so, Fuel Tax Credits (FTC) may be your friend at tax time.
Let’s take a closer look at what FTC is and how it might work for your business…
Fuel Tax Credits (FTC) is a tax refund system that applies to businesses that use fuel for their operations. The system allows businesses to claim a credit for the fuel tax that has been included in the price of fuel purchased for use in their operations. This credit can then be used to offset other tax liabilities owed by the business. The FTC system is designed to help businesses manage their fuel costs and encourage the use of more fuel-efficient vehicles and equipment.
FTC applies to a range of fuels, including petrol, diesel, and liquefied petroleum gas (LPG), as well as a range of other fuels used in specific industries. The amount of FTC that a business can claim depends on the type of fuel used, the business's activities, and the percentage of fuel used for business purposes.
The FTC system is an important tool for businesses that rely on fuel to operate. It can help to reduce fuel costs, which can be a significant expense for some industries. For example, transport and logistics companies rely heavily on fuel to operate their fleets, and the cost of fuel can have a significant impact on their bottom line.
To claim FTC, you need to register your business with theAustralian Taxation Office. Once registered, you can claim the credit on yourBusiness Activity Statement (BAS). The credit can then be used to offset other tax liabilities owed by the business, such as income tax, goods and services tax (GST), and even fringe benefits tax.
As with any business expense, it’s important to keep accurate records of fuel purchases and usage to ensure that you are claiming the correct amount of FTC. It’s also important to note, that the ATO may conduct audits of businesses that claim FTC to ensure that they are complying with the rules and regulations of the system.
On the flip side, the FTC system is also designed to encourage businesses to use more fuel-efficient vehicles and equipment.Businesses that use more fuel-efficient vehicles and equipment will be eligible for a higher FTC rate, which can help to offset the higher cost of these vehicles and equipment.
This is a good a reason as any to consider how your business could lower fuel consumption and costs (see our article about tax incentives for going electric here.
In addition to the standard FTC rate, there are also a range of special rules and rates that apply to certain industries and activities. For example, the agriculture industry is eligible for a higher rate of FTC for diesel used in farming activities, while businesses in the mining industry are eligible for a higher rate of FTC for diesel used in off-road activities.
The ATO provides a range of resources and tools to help businesses understand and comply with the FTC system. These resources include an online calculator to help businesses calculate their FTC entitlements, as well as guidance and information on the rules and regulations of the system.
You can start looking into the FTC on ATOs website.
If you’re looking for more tailored strategic advice to suit your business and its operations, give the Attune team a call on 1300 866 113or send us an email to start the conversation.
