Fuel tax credits - making adjustments and correcting mistakes
Fuel tax credits - making adjustments and correcting mistakes
This guide is for businesses claiming fuel tax credits.
Copies of this publication
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Note that the information below is not included in the Portable Document Format (PDF) version of this document.
Fuel Tax Ruling FTR 2008/1 Fuel tax: vehicle's travel on a public road that is incidental to the vehicle's main use and the road user charge is being reviewed following a recent court/tribunal decision.
For information about:
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You can download a printable version of Fuel tax credits - making adjustments and correcting mistakes (NAT 15681, 338KB) in PDF.
You can order a printed copy by noting the full title of the publication and either:
This guide explains how to change your claim for fuel tax credits on your business activity statement (BAS). It explains:
- the difference between adjustments and mistakes
- the types of adjustments and how to make them
- how to correct a mistake.
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You cannot claim fuel tax credits on your BAS if you are either:
- a householder using fuel for domestic electricity generation
- a non-profit organisation operating emergency vehicles or vessels and not registered, or required to be registered, for goods and services tax (GST).
While the information in this guide is still relevant to you, you must claim fuel tax credits on your Fuel tax credits claim form rather than a BAS.
For more information, refer to Fuel tax credits - domestic electricity generation and non-profit emergency vehicles or vessels (NAT 15621).
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About fuel tax credits
Fuel tax credits provide you with a credit for the fuel tax (excise or customs duty) that is included in the price of fuel. The amount you can claim depends on what fuel you use and how you use it.
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From 1 July 2012, fuel tax credit rates have changed. You may be affected by one or more of the following rate changes:
- an increase in the rate from 19.0715 cents per litre for taxable liquid fuels (eg petrol, diesel or fuel oil) used in some off-road business activities
- a carbon charge which reduces rates for some fuel types and activities (excluding specified agriculture, fishing, forestry and road transport activities and non-combustible fuel use)
- a decrease in the rate for heavy vehicles for travelling on public roads
- changes in the rates for some gaseous fuels - these are liquefied petroleum gas (LPG), liquefied natural gas (LNG) and compressed natural gas (CNG)
- changes in the rates for some blended liquid fuels.
For more information about these changes, refer to Fuel tax credits - changes from 1 July 2012.
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For more information about fuel tax credits refer to:
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The fuel tax credit eligibility tool can help you work out your eligibility for fuel tax credits and the rate at which you can claim.
The fuel tax credit calculator can help you work out your fuel tax credit entitlements as well as any adjustments. It also provides a summary report you can use when completing your BAS.
Adjustments and mistakes
An adjustment is necessary when you have already claimed fuel tax credits based on your intention to use that fuel in a certain way, and you end up using some of that fuel in a different way. Therefore, your BAS was correct at the time of lodgment because you intended to use the fuel that way.
A mistake is when the amount you claimed on your BAS was not correct at the time you lodged it because you made an error.
Any outstanding fuel tax credits must be claimed within four years of the end of the tax period to which they apply.
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If you forget to claim fuel tax credits that you are entitled to, this is not considered a mistake. You can claim them using your current BAS rather than revising an earlier BAS that relates to the date of the invoice.
If you are including fuel you omitted from a previous BAS period, from 1 December 2011 to 30 June 2015 you need to use the rate that applied when you acquired the fuel. However, for heavy vehicles travelling on a public road, you need to use the rate in effect at the beginning of the tax period covered by your current BAS.
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Adjustments
Making an adjustment may increase or decrease your fuel tax credit entitlement. A decrease may mean you have to repay a debt to us.
If an adjustment results in an increase in your fuel tax credit entitlement, then you add the dollar amount of the adjustment to your fuel tax credit entitlement at label 7D (Fuel tax credit) on your BAS.
If an adjustment results in a decrease in your entitlement, then you have been overpaid fuel tax credits. Write this dollar amount at label 7C (Fuel tax credit over claim) on your BAS.
Types of adjustments
You may have to make a fuel tax credit adjustment on your BAS for a number of reasons. The table below outlines how to make an adjustment in a range of situations.
Table 1: Types of adjustments
Type of adjustment
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Increase or decrease in entitlement
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Which label to complete on your BAS
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When to make the adjustment
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Change to your intended use of fuel
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Used more fuel for an eligible use than intended.
See example 1.
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Increase
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Label 7D
Fuel tax credit
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On the BAS for the tax period in which you become aware of the actual use of the fuel.
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Used less fuel for an eligible use than intended.
See example 2.
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Decrease
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Label 7C
Fuel tax credit over claim
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Used the fuel for a different eligible use than intended, increasing your entitlement.
See example 3.
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Increase
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Label 7D
Fuel tax credit
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Used the fuel for a different eligible use than intended, decreasing your entitlement.
See example 4.
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Decrease
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Label 7C
Fuel tax credit over claim
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Fuel lost, stolen or otherwise disposed of
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Claimed for fuel for an eligible use and it was later lost, stolen or otherwise disposed of, decreasing your fuel tax credit entitlement.
See example 5.
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Decrease
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Label 7C
Fuel tax credit over claim
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On the BAS for the tax period in which you become aware of the loss, theft or disposal of the fuel.
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Generally, when calculating your fuel tax credit entitlement, use the fuel tax credit rate that applied at the time you acquired the fuel.
Rates are subject to change annually to 1 July 2015, then 6 monthly thereafter, due to changes in the carbon price.
If you pay your GST in instalments and are registered for fuel tax credits, special rules apply. Under these rules, an adjustment may be delayed to a later tax period. For more information, refer to Fuel tax credits and GST instalments.
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Example 1: Change in the use of fuel - used more fuel than intended, increasing entitlement
Peter has a grounds maintenance business. He buys 1,500 litres of diesel on 21 July 2012, intending to use 500 litres in his slashers and mowers (eligible for fuel tax credits), and 1,000 litres in his two tonne diesel truck that travels on public roads (ineligible for fuel tax credits). Peter claimed fuel tax credits on his September quarterly BAS of $159 (500 x $0.31933) for his intended use of diesel in the slashers and mowers, which includes the carbon charge for diesel.
On 15 October, Peter sells his truck and buys a two tonne petrol utility for the same use (also ineligible for fuel tax credits), so he decides to use the remaining diesel (1,000 litres) in his slashers and mowers.
Peter can claim an increase in fuel tax credit entitlements of $319 (1,000 x $0.31933) at label 7D (Fuel tax credit) in his December quarterly BAS as this is the BAS for the tax period in which he became aware of the changed use of the fuel.
Example 2: Change in the use of fuel - used less fuel than intended, decreasing entitlement
Chris has an earthmoving business. On 21 July 2012, he buys 4,000 litres of diesel intending to use it in his front-end loader and backhoe working on-site (eligible for fuel tax credits and subject to the carbon charge). Chris claims fuel tax credits of $1277 (4,000 x $0.31933) on his September quarterly BAS.
In October, Chris changes his business activities. He sells his backhoe and uses 2,000 litres of the diesel in his one tonne utility driving between sites. Chris has used less fuel in an eligible activity than he claimed for as the actual use of the 2,000 litres in his utility is ineligible for fuel tax credits.
Chris must decrease his fuel tax credit entitlements by $638 (2,000 x $0.31933) at label 7C (Fuel tax credit over claim) on his December quarterly BAS as this is the BAS for the tax period in which he becomes aware of the changed use of the fuel.
Example 3: Change in the use of fuel - used for a different eligible use, increasing entitlement
Jess has a primary production business. On 15 July 2012, she buys 5,000 litres of diesel intending to use 2,000 litres in her 10 tonne truck carrying produce to the rail head and 3,000 litres in her tractors and harvester. Both activities are eligible for fuel tax credits but different rates apply. Jess claimed $1,397 on her September quarterly BAS (2,000 x $0.12643 = $252.86) plus (3,000 x $0.38143 = $1,144.29). Jess's primary production business activity is exempt from the carbon charge.
In October, her truck broke down. Jess had only used 1,000 litres in her truck, so she used the remaining 1,000 litres (intended for her truck) in her tractors and harvester instead. As Jess has used the fuel for a different use than intended, her actual entitlement to fuel tax credits is $1,652 (1,000 x $0.12643 = $126.43) plus (4,000 x $0.38143 = $1,525.72).
Jess can claim an increase in fuel tax credit entitlements of $255 ($1,652 - $1,397) at label 7D (Fuel tax credit) on her December quarterly BAS as this is the BAS for the tax period in which she becomes aware of the changed use of the fuel.
Example 4: Change in the use of fuel - used for a different eligible use, decreasing entitlement
Leo is a commercial fisherman and only uses his boat for business purposes. He buys 12,000 litres of diesel on 28 August 2012, intending to use it in his boat (eligible for fuel tax credits and an activity exempt the carbon charge), so Leo claimed fuel tax credits of $4,577 (12,000 litres x $0.38143) on his September quarterly BAS.
In October, Leo uses 1,000 litres of the diesel in his forklift, which he uses on the dock to load his catch for transportation. Leo has used the fuel for a different eligible use than intended, decreasing his entitlement. As it has a different rate, Leo is only entitled to 31.933 cents per litre for the 1,000 litres he used in the forklift as it includes the carbon charge.
Leo calculates the adjustment by subtracting his actual entitlement from the original amount of fuel tax credits he claimed.
Leo's actual entitlement is $4,515 (11,000 x $0.38143 = $4,195.73) plus (1,000 x $0.31933 = $319.33).
Leo must decrease his fuel tax credit entitlements by $62 ($4,577 - $4,515) at label 7C (Fuel tax credit over claim) on his December quarterly BAS as this is the BAS for the tax period in which he becomes aware of the changed use of the fuel.
Example 5: Fuel lost, stolen or otherwise disposed of, decreasing entitlement
Gerry stores his diesel in a bulk tank at his earthmoving business. In September 2012, Gerry buys 5,000 litres intending to use it in his front end loader (eligible for fuel tax credits but subject to the carbon charge) so, on his September quarterly BAS he claimed fuel tax credits of $1,596 (5,000 x $0.31933).
In October, the tank is damaged and Gerry estimates half the fuel (2,500 litres) is lost. Gerry cannot use that fuel in his business so he is not entitled to fuel tax credits for the lost fuel.
Gerry must decrease his fuel tax credit entitlements by $798 (2,500 x $0.31933) at label 7C (Fuel tax credit over claim) on his December quarterly BAS as this is the BAS for the tax period in which he becomes aware of the loss of the fuel.
Mistakes
A mistake on your BAS is different to an adjustment as described in the previous section.
A mistake occurs when your BAS was not correct when you lodged it. If you realise you have made a mistake on a BAS you must correct it.
You may need to increase your fuel tax credits - for example, where you used a lower fuel tax credit rate than you were entitled to.
You may need to decrease your fuel tax credits if you have:
- made clerical errors - for example, you double-counted some fuel purchases
- over calculated your eligible quantity of fuel
- used a higher fuel tax credit rate than you were entitled to
- claimed fuel tax credits for all fuel acquisitions, instead of only those intended for use in an eligible activity.
If you meet the rules for correcting mistakes (see below), you can correct a mistake by doing either of the following:
- increasing your fuel tax credit entitlement in your total at label 7D (Fuel tax credit) on your current BAS
- decreasing your fuel tax credit entitlement in your total at label 7C (Fuel tax credit over claim) on your current BAS.
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Fuel Tax Ruling FTR 2008/1 Fuel tax: vehicle's travel on a public road that is incidental to the vehicle's main use and the road user charge is being reviewed following a recent court/tribunal decision.
For information about:
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If you want to correct mistakes from your previous BAS on your current BAS, some rules apply. These relate to when the mistake occurred and the dollar value of the mistake.
The value limits apply regardless of whether your entitlement is being increased or decreased. The time limits only apply if your entitlement is being decreased.
Time limits
A time limit applies for the correction of mistakes. From the time the mistake occurred (not when it was discovered), you have a limit on the number of subsequent BAS on which you can correct the mistake. If you do not correct the mistake within the time limit, then you will only be able to correct the mistake on the BAS on which the mistake occurred.
The time limits vary depending on the turnover of your business for GST purposes.
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The time limits for correcting mistakes only apply if your entitlement to fuel tax credits is being decreased.
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Table 2: Time limits for correcting mistakes
Annual turnover
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Time limit
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Less than $20m
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Up to 18 months, that is:
- 18 x monthly BAS
- 6 x quarterly BAS
- 1 x annual GST return
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$20m or more
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Up to three months (3 x monthly BAS)
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Value limits
The value limit is the maximum dollar amount of corrections you can make on a BAS. You need to work out the net dollar amount of all mistakes from previous BAS that you want to correct on your current BAS.
The value limit varies depending on the turnover of your business. The limits apply regardless of whether your entitlement is being increased or decreased as a result of correcting the mistake.
Table 3: Value limits for correcting mistakes
Annual turnover
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Value limit
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Less than $20m
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Less than $5,000
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$20m to less than $100m
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Less than $10,000
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$100m to less than $500m
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Less than $25,000
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$500m to less than $1b
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Less than $50,000
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$1b or more
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Less than $300,000
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Table 4: Summary of procedures for correcting mistakes
Type of mistake
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Which limits are applicable?
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How to correct the mistake
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Time limit
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Value limit
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Limits were met
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Limits not met
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Mistakes that increase your fuel tax credit entitlement
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Not applicable
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Yes
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Correct the mistake on your current BAS
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Revise the original BAS on which the mistake occurred
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Mistakes that decrease your fuel tax credit entitlement
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Yes
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Yes
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Example 6: Correcting mistakes within time and value limits
Jack operates a transport business with a turnover of $1 million. As a result of clerical errors, he incorrectly over claimed $6,000 in fuel tax credits on his previous two quarterly BAS. Jack had also used the wrong fuel tax credit rate for one of his fuel purchases and claimed $2,900 less than he was entitled to. The net effect of his mistakes was $3,100 ($6,000 - $2,900).
Correcting these mistakes reduces Jack's fuel tax credit entitlement so he must consider both the value and time limits.
Jack can correct the mistakes by including $3,100 at label 7C on his current BAS because the net effect of the mistakes he needs to correct does not exceed the value limit of $5,000 or the time limit of six quarterly BAS.
Mistakes that exceed the time or value limits
If you become aware of mistakes that exceed the time or value limits, you can only correct these mistakes by revising the original BAS on which the mistake occurred.
If you revise a previous BAS because you have over claimed fuel tax credits, you will be liable to pay the general interest charge.
Correcting mistakes on previous or current BAS
Where the net effect of mistakes from one or more of your previous BAS exceeds your value limit, you must revise those original BAS. In some cases, each of your original BAS must be revised. In other cases, you may only need to revise some of your previous BAS for you to bring the net effect of your remaining mistakes below the value limit.
Example 7: Correcting mistakes exceeding the value limits
Amy operates an agricultural business with an annual turnover of $1 million. She incorrectly claimed $11,000 in fuel tax credits on her previous two quarterly BAS.
The breakdown of her mistakes is:
- quarter ended 31 March 2012 - $5,000
- quarter ended 30 June 2012 - $6,000.
Amy would like to correct the mistakes on her BAS for the quarter ended 30 September 2012 (her current BAS).
The net value of the mistakes means that Amy's fuel tax credit entitlement will be reduced. Therefore, she is subject to both the value and time limits. The time limit of six quarterly BAS has not been exceeded. However, her mistakes exceed the value limit of $5,000.
As the value limit for the correction of mistakes on any BAS is $5,000, Amy can do either of the following:
- correct each mistake on the original BAS in which the mistake occurred by revising each BAS
- correct the $5,000 mistake on her BAS for the quarter ended 30 September 2012 (her current BAS) and revise her original BAS for the quarter ended 30 June 2012 for the $6,000 mistake - being the BAS on which the mistake occurred.
The general interest charge is payable on any revision to her BAS for the tax periods ended 31 March 2012 and 30 June 2012.
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You can request a BAS revision form:
- electronically (provided you are registered to deal with us online) through the Business Portal
- by using the electronic lodgment service (ELS) or the Tax Agent Portal through your tax agent
- by phoning us on 13 28 66 between 8.00am and 6.00pm, Monday to Friday.
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Conditions for using the correction of mistakes arrangements
We have established these arrangements to help you comply with your obligations. However, we are not bound by these arrangements if you misuse them, misrepresent your intentions of fuel use or make unreasonable and unsupportable calculations of your entitlement to fuel tax credits.
Mistakes you can correct
You can only use these arrangements to correct mistakes that are genuine and reasonable. They do not apply in circumstances where we think you are deliberately manipulating your affairs to take advantage of the arrangements. If we think this is the case, you will need to go back and revise each BAS on which an error occurred and the general interest charge will apply from the due dates on those BAS. We may also withdraw the right for you to use these arrangements in the future.
If you establish a regular pattern of correcting mistakes by adjusting your current BAS for amounts that are at the upper end of the correction limits, we may also consider this as an abuse of the arrangements. Where these mistakes are genuine and occur in the normal course of business, you must demonstrate how these mistakes have occurred.
When a mistake should be corrected
Corrections decreasing your fuel tax credit entitlement should be made as soon as possible after the mistake is found - either by making the correction in the next BAS or by requesting a revision of the original BAS in which the mistake occurred. We consider you to be taking advantage of the correction arrangements if you deliberately delay the correction of a mistake that decreases your entitlement to fuel tax credits until the last tax period before the time limit runs out.
What if you are being audited or reviewed?
If you receive advice from us about our intention to conduct a review, you are not able to apply these arrangements from that date until the review has been finalised. Our advice may be in writing or by phone. We will arrange to revise all relevant BAS to correct any errors uncovered in the review, including any voluntary disclosures notified at the start of, or during the course of, the review. Where any previous BAS is corrected, the general interest charge will apply from the due date of that BAS.
If you find errors in a previously lodged BAS after we have notified you of a review, it is in your best interests to voluntarily disclose the errors. If you tell us about your mistake it will be taken into account when we consider the application of a penalty.
If an error is found during your review and it is clear you have made a genuine attempt to comply with your tax obligations, there will be no penalty on the shortfall amount. If the error is within the value and time limits (where applicable) we may allow you to use these arrangements and include the amount in your next BAS. If the error is outside the value or time limits we will revise your fuel tax credit entitlements for the relevant tax period and you will be sent a notice of assessment. The general interest charge may need to be paid on a revision to a BAS for an earlier tax period.
Record keeping
You should keep records detailing the nature and extent of any change for five years if you:
- make an adjustment
- correct a mistake
- claim an amount you failed to claim on an earlier BAS.
Records should include date, type and quantity of fuel acquired, and the activities each fuel was used for
Self assessment
Self assessment for indirect taxes (including fuel tax credits) commenced on 1 July 2012. When you lodge a BAS for tax periods that commence on or after that date, you will still include the dollar amounts of fuel tax credit and fuel tax credit adjustments for the tax period. You will also include your GST payable, input tax credits and other amounts as required.
The Commissioner is taken to have made an assessment of your net credit or liability (known as your net amount or net fuel amount) based on the amounts you include on your BAS on the day you lodge. Your BAS is treated as being a notice of assessment signed by the Commissioner and issued on the day it is given to us.
You have an obligation to comply with tax laws and you may be liable to pay a penalty and/or the general interest charge (GIC) if you revise a previous BAS to correct an over claimed fuel tax credit amount.
Penalties and the GIC may apply in either of the following circumstances:
- you are correcting a mistake that reduces your entitlement to fuel tax credits and (as a consequence of not meeting the value and time limits), the correction must be made by revising the BAS in which the mistake occurred
- you became aware of an adjustment before lodging your BAS but you did not include the adjustment on the appropriate BAS.
In these circumstances, the GIC will be calculated from the due date of the BAS on which the mistake was made or the BAS to which the adjustment relates.
You can claim the GIC as an income tax deduction.
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If you receive an overpayment of fuel tax credits, the overpaid amount should be treated as tax that is due. This means that you must repay the overpayment plus any penalties and the GIC owing from the date of the overpayment.
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More information
For more information about fuel tax credits, refer to:
You can access these publications using the links above. You can also obtain copies of some of these publications by:
- visiting online ordering
- phoning our operator-assisted publications ordering service on 1300 720 092 between 8.00am and 6.00pm weekdays - this service is not available on weekends or public holidays
- phoning our automated publication ordering service any time on
- 13 72 26 if you have an ABN
- 13 28 65 if you don't have an ABN.
You must know the name of the publication to use this service.
The Fuel tax credit eligibility tool can help you to work out your eligibility for fuel tax credits and the rate at which you can claim.
The Fuel tax credit calculator can help you work out your fuel tax credit entitlements as well as adjustments.
You can also:
- visit www.ato.gov.au/fuelschemes
- phone 13 28 66 between 8.00am and 6.00pm, Monday to Friday
- write to us at
Australian Taxation Office
PO Box 3001
PENRITH NSW 2740
If you do not speak English well and need help from the ATO, phone the Translating and Interpreting Service on 13 14 50.
If you are deaf, or have a hearing or speech impairment, phone the ATO through the National Relay Service (NRS) on the numbers listed below:
- TTY users, phone 13 36 77 and ask for the ATO number you need
- Speak and Listen (speech-to-speech relay) users, phone 1300 555 727 and ask for the ATO number you need
- internet relay users, connect to the NRS and ask for the ATO number you need.
Last Modified: Tuesday, 11 December 2012
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