Fuel Tax Credits Explained: Part 1 The basics of Fuel Tax Credits
A Key Player
Fuel is a major line item for many SMEs in Perth and WA—from freight and logistics through to farmers, construction and food distribution. The Fuel Tax Credit (FTC) regime is designed to return part of the fuel excise to eligible businesses. Done well, it improves margins and boosts cash flow; done poorly, it creates audit risk. This Part 1 overview sets the foundations in clear, practical terms for Perth operators.
Perth at a glance: why FTCs matter
Perth’s spread-out industrial footprint—Kewdale, Neerabup, Kwinana—means longer routes and heavier reliance on fuel. FTCs can materially reduce your delivered cost per job, kilometre or pallet. For multi-site operators, correctly capturing and allocating fuel use (on-road vs off-road vs auxiliary) can be the difference between a tidy BAS refund and foregone cash.
Eligibility – What Typically Qualifies
- Heavy vehicles travelling on public roads (subject to a road user charge reduction).
- Off-road use: construction sites, agriculture, mining, generators, forklifts, compressors, EWPs, skid steers and similar.
- Auxiliary equipment powered by the vehicle’s fuel (e.g., refrigeration units, tail lifts, concrete agitators).
You must be registered for GST and registered for Fuel Tax Credits with the ATO to claim. If you are a sole trader, family trust, or company – you can still qualify.
Refrigerated transport: vans under 4.5 tonnes still count (for the fridge)
A frequent miss in Perth’s cold-chain fleet is refrigerated vans under 4.5 tonnes GVM. While their on-road propulsion fuel usually doesn’t qualify, the fuel used to power the refrigeration unit can be eligible. If the fridge draws from the same tank as the engine, you can claim the auxiliary component only; if it has a separate tank, claim the fuel used in that tank (subject to normal rules).
Perth example: Kewdale to Kwinana refrigerated runs
A food distributor operates from Kewdale to industrial customers in Kwinana using small, refrigerated vans. They can’t claim the on-road propulsion fuel for those vans. They can claim the fuel used by the refrigeration.
Remote power generation – diesel generators in Telfer, WA
A mining services business operating near Telfer, in the Pilbara, runs large diesel generators to power a remote accommodation camp and workshop facilities. None of this fuel is used for on-road transport – it is entirely for off-road power generation.
This means all the diesel consumed by the generators is eligible for the full FTC rate, as it is off-road use in a business activity.
Records: if you can’t count litres, you can’t keep credits
Strong record-keeping is non-negotiable. At minimum:
- Supplier / depot records with litres delivered (tax invoices, delivery dockets).
- Depot issues by litres to vehicles/plant.
- Allocation method: on-road vs off-road vs auxiliary (e.g., refrigeration) with a clear apportionment basis.
- Odometer/GPS/telematics where relevant to support splits.
For Perth operators running their own depots, insist that fuel depots give litres of fuel—not just dollar values—on every delivery and internal issue.
Common errors we see (and fix)
Sadly, we see more errors in claiming the Fuel Tax Credit than we care to admit, especially with new clients. Some of them include:
- Missing the claim on fuel use that is for something other than heavy haulage.
- Wrong rate after indexation on or after 1 February and 1 August.
- Dollar-based depot records with no litres, or no reconciliation back to tank levels.
- No FTC registration (GST-registered but FTC box never ticked).
- Double counting between GST input credits and FTCs (or claiming auxiliary and propulsion together without apportionment).
Each of these is fixed with engaging with your accountant. And your BAS team will get better as your business increases and develops.
Documentation for Middle Sized Business
As the business grows from a small business to a middle-sized business, the way you manage Fuel Tax Credits should get better. This will make it easier for new team members to understand the business, and also keep the ATO happy:
The documentation must be reasonable for the business size. Some ways to document how you manage the Fuel Tax Credit are:
- Have a policy: what you claim, what you don’t, who signs off, how you apportion auxiliary fuel.
- Process map: depot receiving, issuing, reconciliation, and BAS preparation.
- Controls & evidence: meter calibration schedule, sample checks of apportionment,
- Quarterly review: pre-BAS checklist aligned to 1 February / 1 August indexation dates.
- Accountability: who obtains data; who does BAS; who reviews BAS.
The ATO don’t want to see a position where the internal accountant obtain the numbers, lodged the BAS, received the refund and there are no records of how it was done.
Is it worth claiming Fuel Tax Credits?
Absolutely, and it is a shame when we see businesses missing out on their FTC claim. A business spending $100,000 on diesel at $1.82 per litre is using around 54,945 litres of fuel. If that fuel is used entirely in off-road eligible activities, the FTC refund is about $28,350 straight back into the business through the BAS. For Perth operators — from refrigerated transport between Kewdale and Kwinana to diesel generators powering remote sites in Telfer — these refunds can quickly become a major cash flow advantage.
The Westcourt FTC readiness checklist for Perth operators
Do our fuel suppliers and depots provide litres on every delivery?
Can we split auxiliary (refrigeration) fuel from propulsion for sub-4.5t vans?
Have you updated rates for 1 February and 1 August?
Do we reconcile opening + deliveries − issues = closing for each tank?
Is our FTC registration in place and current?
Do we have a written apportionment method (with evidence) for auxiliary use?
What’s next
Part 2 will step through the technical framework and the ATO guidance your auditors care about. Part 3 translates that into Perth-specific strategies and case studies, including cold-chain, construction and mining services.