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  • Fuel tax credits gap

    The fuel tax credits gap is the difference between the estimated value of fuel tax credits that businesses are entitled to claim according to the law, and the value of fuel tax credits they actually claim for a financial year.

    Fuel tax credits provide businesses with a credit for the excise or customs duty included in the price of fuel they use in the ordinary course of operating their business.

    The intention of fuel tax credits is to remove or reduce the cost of fuel tax on taxable fuels used in business operations.

    Differing rates of credits apply depending on the type and use of the fuel. To make a claim, a taxpayer must be carrying on a business and be registered for GST at the time they acquire, manufacture or import taxable fuel.

    Challenges for taxpayers exist due to complexities resulting from the:

    • frequency of rate changes
    • need to consider fuel type
    • need to apportion fuel use for different business activities, locations and vehicle type.

    The fuel tax credit gap arises from taxpayers not claiming their correct credits. However, as the fuel tax credits system is voluntary, there is potential for overly conservative compliance by taxpayers. That is, eligible taxpayers might underclaim or not make a claim, which results in a negative gap.

    Estimate of the gap

    The fuel tax credits net gap estimate for 2017–18 is a small, negative gap of −$5.7 million (−0.1%).

    As the amount of fuel tax credits underclaimed exceeded the amount of fuel tax credits overclaimed, it resulted in a negative net gap. This indicates that overall some taxpayers who are entitled to fuel tax credits have not claimed their full entitlement. This may be either due to conservativism or being unaware of rate increases.

    This result is a small improvement to the 2016–17 result, where the net gap was −$6.2 million or −0.1%.

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      Last modified: 17 Oct 2019QC 57176