If you’re a sole trader or small business owner claiming fuel tax credits, it’s important to know that fuel tax credit rates have changed from 1 April 2026. While the change may seem minor, using the wrong rate could affect the amount you claim and may lead to errors in your Business Activity Statement (BAS) or tax reporting. Fuel tax credits allow eligible businesses to claim back the fuel tax included in the price of fuel used for business activities, such as running heavy vehicles, machinery, generators or equipment.
What’s changed?
The Australian Government temporarily cut fuel excise on petrol and diesel for three months. Because fuel tax credits are based on the amount of excise included in the fuel price, the reduction in excise has directly reduced the credit businesses can claim in the 3 month period from 1 April 2026. This means: fuel bought before 1 April 2026 must be claimed at the old rate; and fuel bought on or after 1 April 2026 must be claimed at the new rate. If you purchased fuel across both periods, you may need to use two different rates when calculating your claim. You can find the latest fuel tax credit rates on the ATO website.
Why this matters
Your claim amount may change even a small rate adjustment can affect the total amount you’re entitled to claim, particularly if fuel is a regular business expense. Using the updated rates ensures you are claiming the correct amount.
Good record keeping is essential
To claim accurately, you need records that show when fuel was purchased, how much was bought, and that it was used for eligible business purposes. This is especially important if you’re preparing your own BAS. Errors may delay or affect your return Using the wrong fuel tax credit rate may result in overclaiming or underclaiming. This can lead to BAS corrections later, or delays if the ATO reviews your claim.
Fuel costs affect cash flow
Fuel tax credits can provide valuable cash flow support, perhaps especially for sole traders and contractors. Claiming the right amount helps ensure you receive the full benefit available.
What you should do now
If you claim fuel tax credits, review any fuel purchases made from 1 April 2026 onward and make sure you’re applying the updated rate. The ATO offers an online fuel tax credit calculator to help work out the correct amount based on the fuel type, purchase date and business use. Staying on top of rate changes helps keep your BAS accurate and ensures you don’t miss out on valuable tax credits.
If you’d like help preparing your BAS or reviewing your fuel tax credit claims, our SME accounting services include ongoing BAS preparation and compliance support for sole traders and small businesses.
Frequently asked questions
What are fuel tax credits and who can claim them?
Fuel tax credits allow eligible businesses to claim back the fuel excise included in the price of fuel used for business purposes. This applies to fuel used in heavy vehicles, machinery, generators and other equipment. Sole traders and small business owners are among those who commonly claim these credits.
Why did fuel tax credit rates change from 1 April 2026?
The Australian Government temporarily reduced fuel excise on petrol and diesel for a three-month period. Because fuel tax credits are calculated based on the excise included in the fuel price, the temporary reduction flows through directly to lower credit rates for fuel purchased during that period.
Does the rate change affect fuel I bought before 1 April 2026?
No. Fuel purchased before 1 April 2026 must be claimed at the rate that applied at the time of purchase. The new rate only applies to fuel bought on or after 1 April 2026. If you purchased fuel across both periods, you will need to apply two different rates when calculating your claim.
Where can I find the current fuel tax credit rates?
The ATO publishes the current rates on its website and also provides an online fuel tax credit calculator to help you work out the correct amount based on fuel type, purchase date and business use. Using the calculator is a straightforward way to make sure your claim is accurate.
What records do I need to keep to claim fuel tax credits?
You need records that show when the fuel was purchased, how much was bought, and that it was used for eligible business purposes. Good record keeping is particularly important if you are preparing your own BAS, and becomes even more so when rates change mid-period and you need to split your claim across two different rates.
What happens if I use the wrong rate on my BAS?
Using an incorrect rate can result in either overclaiming or underclaiming. Both can cause problems: overclaiming may trigger ATO review and require a BAS correction, while underclaiming means you miss out on money your business is entitled to. Taking a few minutes to apply the correct rate is worth it, particularly if fuel is a regular and significant business expense.
