Calculating Fuel Tax Credits

Your Fuel Tax Credits or FTC is based on different things among them when you purchased the fuel, how you used it, and the fuel type used. All FTC claims require you to report about the kind of fuel you use in your vehicles and how often you use it because usually, the FTC rates vary. However, if you use the proper tools, you can manage to calculate your FTC and claim refunds without any hassle.

Eligibility for FTC

Businesses that are eligible for FTC application are those that use fuel in machinery, heavy vehicles, equipment, or commercial vehicles that travel public roads. You can also claim unclaimed refunds, but the fuel was purchased and used in the past four years.

Claim process

Before you can begin calculations, you have to know the amount of fuel used and the kind of fuel purchased for all business activities.

Exemptions include:

  • Fuel used in aviation
  • Fuel used for certain gross mass vehicles of 4.5 tonnes or those not travelling often public roads
  • Fuel for heavy vehicles with harmful for the environment emissions of fuel
  • Privately used fuel, not for business purposes
  • Acquired but stolen, lost, or disposed of fuel
  • Fuel rates

It is essential to know the applicable rates for fuel purchased and the way used. Several times per year rates vary and change, you must check for the most recent date information from the ATO on their website. When you begin calculation for your FTC, you have to include fuel purchased and used for heavy vehicles and apply the applicable rate from the date the fuel was acquired.

Claiming FTC

You’re required to put together information that supports your fuel acquisitions at the end of each BAS period. For each of your vehicles, you have to calculate the fuel used and the activity on them. Use the FTC rates that applied for that period. These are some ways on how to calculate fuel tax credits:

  • Constructive Method
  • Deductive Method
  • Percentage Use Method
  • Estimated Use Method

Required calculations include:

  • Reading of odometer for travelled kilometres
  • For fixed distances along regular routes vehicles travelled
  • Electricity generated in kilowatts
  • Hours of operation for equipment or vehicles
  • Consumption of fuel per hour for vehicles or equipment

When calculating, you have to include the time when the fuel was purchased. Then calculate your FTC amount in dollars, taking the amount of fuel and multiplying by the proper FTC rate at the time you acquired the fuel and divide the results by 100 for dollar conversion. Once you’ve calculated the amount for the period, you can add the amount to your BAS  in dollars. Keep in mind that you must claim in a four year period that begins from the date the fuel was acquired to file for reimbursement.

There are many sites online where you can get any additional information and help with your calculations. The Australian tax sites offer many helpful suggestions and ways to make your claim calculating for FTC a lot easier and less complicated. Once you have all the information, you can figure out the amount to claim on your BAS. Always make sure you keep records of all of your vehicles and fuel purchases.

Author: Izabella Carrillo

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