Welcome
No conflicts of interest were declared, and members were reminded to declare any conflicts which may arise during discussions.
Integrity declarations have been completed by all non-government attendees. Attendees were asked to highlight any issues considered sensitive or confidential during discussions.
Reflections of 2024–25 / focus for 2025–26
The fuel tax credit (FTC) scheme is currently considered by the Australian Taxation Office (ATO) as a low-risk program and is operating as intended. The focus is on how to make it simpler for those who already comply but target and address any areas of concern. Overall, the scheme is quite simple, unless apportionment of fuel use is involved, which is where the ATO will continue to focus attention.
Tax gap estimates are used by the ATO as a measure of voluntary compliance and amount of underclaims and overclaims of FTCs. Tax gaps are updated and reported in October yearly. The 2022–23 FTC tax gap was 4.3% or $322.3 million, with the total FTC claims for that period being $7.5 billion. The gap is a net figure, combining estimated underclaims and overclaims. Against other product tax gaps, this is considered as a low non-compliance rate.
The current methodology to calculate the fuel tax credits gap is complex and does not allow the ATO to segment the tax gap estimate further. For example, it isn’t possible to estimate the FTC tax gap by industry or size of claimant. The results of actual compliance activities provide some insights as to where most issues are found.
Future tax gaps will consider focusing on identifying how much of the tax gap may be attributed to fraud or errors in calculations. The ATO noted that not all eligible claimants submit FTC claims where people are not aware of FTCs or consider the amount received too low compared to the effort required to substantiate claims. From the current FTC population, it was noted that of nearly 300,000 registered claimants, in a particular BAS period only, 180,000 might submit claims. This may also be impacted by seasonal claimants. Tax gaps around 4% are more susceptible to statistical data variations.
We continue to work to ensure that the tax gap estimate for FTCs remains low by making it easy for claimants to claim. Claiming is clear and simple, assisted by tools, as well as addressing those overclaiming with better tools, support and where required, audit action.
We are aware that some underclaiming exists due to perceived complexity/risk in claims being submitted.
Approximately 180,000 FTC claimants lodged claims in 2023–24, with the amount claimed totalling $9.6 billion across:
- $4.5 billion by the mining industry
- $1.8 billion for transport, postal and warehousing
- $693 million for construction
- $1.1 billion for agriculture, fisheries and forestry.
Excise dataExternal Link and statistics dating back to 2007 are available, noting that the temporary fuel excise reduction impacted amounts in 2021–22 and 2022–23. Data represents the value of claims and not the volume of fuel that may have been used.
Technology has significantly improved fuel apportionment methods, moving away from anecdotal approaches and spreadsheets. It is not foolproof and must be supported by other evidence to ensure low-risk, high-accuracy outcomes. Apportionment methods must be regularly reviewed. Initial setup may require significant effort, but ongoing review is essential due to changes in business operations, for example equipment type, age, size. Methods should account for factors that could distort results.
While testing every vehicle isn’t expected, a reasonable sample size is needed to provide assurance that claims are accurate and not over/understated. Methodologies (deductive or constructive) must be validated against actual fuel acquired to avoid overclaiming. Accurate fuel acquisition data is critical, and claims must be backed by appropriate documentation, which the ATO has found is sometimes missing in practice and results in significant adjustments to claims.
A global positioning system can support apportionment, but it has limitations so checks and balances are necessary to ensure reliability. There is a risk relying on default fuel consumption rates or applying them across different equipment types without supporting evidence. A balance is needed between sufficient evidence and practical claim support. If clients or members are concerned about the risk of a methodology, they can reach out to the ATO for guidance and assurance.
Members raised an issue about contradictory messaging from auditors regarding estimates used for claiming FTCs in the agriculture sector. Michael Hughes noted that without knowing the specific case, sometimes context and caveats can be missed in anecdotal reports. The ATO accepts evidenced-based estimates provided they are reasonable and supported by documentation appropriate to the size of the enterprise, noting that original assumptions should be regularly reviewed, like vehicle use, fuel types to ensure the methodology remains true.
Members raised concerns about the feasibility of tracking every kilometre or litre, especially for incidental use, like utes on farms. Darryl Daisley noted that the mining sector uses representative sampling (weekly/monthly) and reviews methods when operations change.
Members noted that some organisations still use methods developed over a decade ago and assume they are still ATO-approved as they passed previous audits. Members expressed a desire for clearer, stronger ATO guidance on how often methodologies should be reviewed and updated. The ATO acknowledged the need for updated guidance, for example, existing PCG 2016/8 and PCG 2016/11 and will seek member feedback on what further guidance would be helpful.
Advisors struggle to convince clients to update methods if they have passed audits before, but the advisor may be concerned whether the client has reviewed and assessed previous methodologies. Advisors are seeking ATO messaging to support them encouraging regular reviews.
The ATO agrees to provide short-term clarification and work on longer-term updates, asking industry to identify gaps in current guidance.
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Action item |
Review existing public advice and guidance relating to FTC claims |
|---|---|
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Responsibility |
Anthony Barnard |
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Description |
Review existing public advice and guidance relating to FTC claims. Members will be asked to provide feedback on current public advice and guidance products. |
The ATO will undertake work to review existing public advice and guidance relating to FTC claims. Members will be asked to provide feedback on current public advice and guidance products – Anthony Barnard.
Group governance
A membership review was carried out in July 2025, with membership considered in terms of representation and engagement. Several changes have since been made.
As part of governance for stakeholder groups, the groups charter is required to be endorsed annually. The 2024 charter was provided in meeting papers for consideration. No comments were received from members, and the charter will carry over for 2025.
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Action item |
Endorsement of 2025 charter |
|---|---|
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Responsibility |
Chair and members |
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Description |
The 2025 Fuel Schemes Stakeholder Group (FSSG) charter is to be distributed to members with the FSSG meeting minutes for endorsement. |
Technical advice
Since 1 July 2025, there have been a few FTC rate changes. The Road User Charge (RUC) increased on 1 July 2025 and biodiesel rates changed from that date as part of the phasing in of excise duty rates. Under current law, phasing in of biodiesel excise duty rates will finish by 2030. There was an increase to excise and customs rates on 4 August, noting that changes don’t always take effect from the first day of the month due to reliance on publishing dates of the consumer price index by the Australian Bureau of Statistics. FSSG members are advised when rate changes occur. The ATO encourages claimants to use the FTC calculator available on ato.gov.au to ensure correct rates are applied to specific dates.
The last of the RUC rate changes given effect to via the Fuel Tax RUC Determination 2023 occurred on 1 July 2025. Further rate changes are for government consideration.
The Miscellaneous Tax Ruling MT 2024/1 Miscellaneous tax: time limits for claiming an input tax or fuel tax credit was issued on 4 December 2024. The ruling advised that credits are required to be claimed within 4 years of the earliest BAS in which they could have been claimed.
Recent deregulation measures included the implementation of a bunker fuels measure. From 1 January 2025, fuel supplied or imported for use in ships 400 tonnes or over are no longer required to pay excise duty. Relevant advice was updated on ato.gov.au
Members were encouraged to liaise with the ATO, particularly where issues may be contentious or complex. Early engagement processes are effective in working through issues to determine the most appropriate guidance product. Members can contact the Technical Advice team via Excise.Experience@ato.gov.au initially.
Further to the earlier discussion regarding ATO advice products, John Gordon noted that guidance around the minimum requirement considered reasonable in terms of small, medium or mature businesses might be useful.
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Action item |
Clarification on changes in PCG 2026/11 |
|---|---|
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Responsibility |
Anthony Barnard |
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Description |
ATO to provide clarification around on the change made to current safe harbours in PCG 2016/11 (paragraph 5). |
Roundtable member comments
Treasury advised that there are no current measures in the FTC space, but it noted that government is holding an Economic Reform Roundtable, with a focus on 3 main themes:
- making our economy more productive
- building resilience in the face of global uncertainty
- strengthening the budget and making it more sustainable.
Information on the Economic Reform RoundtableExternal Link, including the agenda and a short overview paper are available.
- Deloitte advised the main issue for clients relates to calculation and apportionment/substantiation and evidentiary requirements. Deloitte are seeing more clients choosing not to claim any off-road element, particularly in the transport industry. Larger scale claimants refer to difficulties taking a truck out of service to calculate burn rates for testing.
- KPMG noted similar issues with clients reverting to claiming the on-road rate. KPMG are currently working through obtaining reliable telemetry data to build robust calculations. It was noted that there had been significant audit activity during COVID-19 which reinforced clients’ need to ensure they were complying. The road transport industry was struggling, with many advising FTC claims were equal to the bottom line for their business.
- Pitcher Partners advised that some clients consider the safe harbour apportionment methodology low for off road claims and wanted to understand evidence required to support higher claims. Some clients had also indicated that time and effort spent calculating claims for offroad travel were not worth the claim.
- National Road Transport Association echoed KPMG’s comments in relation to the value of FTC claims for the transport industry and noted the importance of reasonable lead times in relation to any changes as many businesses do not have the flexibility to make changes quickly. The biggest issue for many is underclaiming and it was noted the potential uncompetitive advantage of primary production vehicles competing against transport companies in ports. Members discussed usage of the current safe harbour, noting that a slight change of wording in the Practical Compliance Guideline (PCG) led to some vehicles not being listed in relation to auxiliary equipment. This change was in response to Federal Court decision and ATO did note that there is another safe harbour for incidental off road use that mainly focused on farming and construction industries. Further information will be provided to members to clarify existing guidance.
- Members raised the possibility of extending safe harbours or if there could be a safe harbour specifically for off-road claims, or off-road claims for different types of industries. The ATO encouraged industry to put forward their suggestions for potential safe harbours.
- Fuel Tax Advisers agreed with member comments, noting that more guidance would be appreciated, particularly in relation to safe harbours across different industries and on public roads. They referred to the need for consistency in audit messaging. Could the existing safe harbour for claimants under $10,000 be extended to larger claimants to increase the potential client base that would utilise the safe harbour. The ATO has invited specific comments/suggestions from industry on this, and the ATO noted that approximately 80% of current FTC claimants claim under $10,000, with most being self-preparers – that is, a large percentage of the current FTC registered population are able to access the safe harbour.
- Bus Industry Confederation referred to current issues for the bus industry, including anti-social behaviour and staff shortages. Current challenges in relation to electrification of vehicles and the potential competitive advantage for diesel operators was noted. The ATO noted that the policy intent on the introduction of the FTC scheme was for fuel excise to cover the cost of building and maintenance of public roads, with those travelling off road able to claim back that charge. Electrification had not been considered when the scheme was introduced.
- Shipping Australia Limited referred to the recent bunker fuel measure implementation and noted that only minor clarification had been required. Discussions around freight tax were referred to and they advised they will liaise with the ATO if there are any relevant issues.
- Association of Mining and Exploration Companies advised that while the mining industry was an early adopter of new technologies, current experiences with using electric vehicles (both light and heavy) were not as positive as envisioned, particularly in relation to heavy vehicle assets trialled at mining sites. There will likely be a high reliance on FTC for diesel vehicles for some time, with a slow transition in the industry for electric vehicle fleets. FTC claims continued to be vital for the mining sector. They referred to fuel excise / electric vehicle policies considered by the Commonwealth and State Governments, including current discussions around the RUC. The chair noted issues experienced in the USA where policies have been adopted at the state level and noted this would add an extra level of complexity, particularly for companies operating across states. Given the ATO’s administrative role in relation to notional RUC and the FTC scheme, it was also awaiting any government decision in this area.
- Minerals Council of Australia noted the importance of the FTC scheme for members, particularly around the use of diesel in remote and regional areas and the considerable investment by the mining industry to decarbonise, noting recent advice that more than $30 billion would be spent by companies over the next 5 years to decarbonise vehicle fleets.
- Civic Contractors’ Federation supported comments made, particularly in relation to the challenge of electrification and possible changes to the RUC. The importance of reasonable lead times for any transition to any changed arrangements was noted.
- Transport Certification Australia noted an enormous focus across industries on decarbonisation. The TCA had been carrying out research from a service delivery perspective relating to heavy vehicles / the heavy end of the freight space and had noted very slow adoption of electrification. Also commented on, the small net tax gap and the role of certificated telematics perhaps being used due to ease of use rather than providing a minimum level of assurance.
Other business
Members were reminded that the ATO wants to assist them with education about fuel tax credits, reminding them of the recent assistance provided via newsletter articles and webinar presentations, all provided to assist claimants in relation to their obligations and how to claim fuel tax credits.
Attendees
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Organisation |
Attendee |
|---|---|
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ATO |
Michael Hughes (Chair), Small Business, Excise |
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ATO |
Anthony Barnard, Small Business, Excise |
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ATO |
Bonnie Joshi, Small Business, Excise |
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ATO |
Claudia Bianco, ATO Corporate |
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ATO |
Kellysan Powers-Martin, Small Business, Excise Experience |
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ATO |
Michelle Scott, Small Business, Excise |
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Association of Mining and Exploration Companies |
Darryl Daisley |
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BAS Agent |
Nikki Hannaford |
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Bus Industry Confederation |
Varenya Mohan-Ram |
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Civil Contractors' Federation |
Nicholas Proud |
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Commonwealth Fisheries' Association |
Daniel Casement |
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Deloitte |
Laura O'Brien |
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Fuel Tax Advisers |
Peter Perich |
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KPMG |
Anthony Harmer |
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Minerals Council of Australia |
Ross Lyons |
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National Road Transport Australia |
Warren Clark |
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Pitcher Partners |
Peter Quattrocchi |
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Shipping Australia Limited |
Melwyn Noronha |
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Transport Certification Australia |
John Gordon |
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Treasury |
Zoe Chalmers |
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Treasury |
Juyeon Lee |
Apologies
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Organisation |
Member |
|---|---|
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ATO |
Emma Butler, Small Business, Excise |
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ATO |
Michael Brooks, Small Business, Excise |
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Association of Mining and Exploration Companies |
Neil van Drunen |
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Australian Institute of Petroleum |
Malcolm Roberts |
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Australian Trucking Association |
Bill McKinley |
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Bioenergy Australia |
Shahana McKenzie |
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EY |
Kylie Norman |
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Maritime Industry Australia Limited |
Angela Gillham |
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National Farmers' Federation |
Chris Young |
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Treasury |
Liz Jaspers |