• Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    Fuels that are eligible (including gaseous fuels)

    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    You can claim fuel tax credits for any taxable fuel if you acquired, manufactured or imported it to use in carrying on your business.

    Fuel is taxable fuel if excise or customs duty is required to be paid on it. Examples of taxable fuels are:

    • diesel
    • petrol
    • kerosene
    • heating oil
    • toluene
    • fuel oil
    • liquefied petroleum gas
    • liquefied natural gas
    • compressed natural gas.

    For some business activities, you can only claim for certain fuels. For more information, see Business activities and fuel tax credit rates.

    Gaseous fuels

    From 1 December 2011, if you use duty paid gaseous fuels in eligible business activities you may be entitled to fuel tax credits. Gaseous fuels are:

    • liquefied petroleum gas (LPG)
    • liquefied natural gas (LNG)
    • compressed natural gas (CNG).

    Excise or customs duty will apply to gaseous fuels used for transport purposes in most instances. There will also be a small number of circumstances where excise duty is paid on gaseous fuels that will be used for non-transport use.

    Transport gaseous fuels are duty paid and include:

    • LPG or LNG intended for use in an internal combustion engine of a motor vehicle or vessel, either directly or by filling another tank connected to such an engine
    • CNG that is imported or compressed for use as a fuel in a motor vehicle – excluding CNG that is compressed at a residential premises using equipment capable of compression at a rate not more than 10 kilograms of natural gas per hour and not for further sale
    • all gaseous fuels for mixed use (that is, both transport and non-transport use) or where the end use is unknown.

    Non-transport gaseous fuels are not duty paid and include:

    • LPG and LNG delivered only for use other than in an internal combustion engine of a motor vehicle or vessel (for example, residential heating or burner applications) or for use in forklifts
    • CNG imported or compressed only for use in forklifts or not for use as a fuel in a motor vehicle. It also includes CNG compressed at a residential premises (including for use in a motor vehicle) using equipment capable of compression at a rate not more than 10 kilograms of natural gas per hour and not for further sale.

    The amount of fuel tax credits you can claim for duty paid gaseous fuels will vary because the excise or customs duty rates are based on the energy content for each type of fuel. The rates are being phased in over four years, with final rates in place from 1 July 2015.

    Generally, most businesses that use gaseous fuels before 1 July 2012 for non-transport use will not be able to claim fuel tax credits because either:

    • no duty has been paid on the fuel as it was supplied for non-transport use
    • fuel tax credits have already been claimed for LPG by a business earlier in the supply chain.

    When you acquire LPG that is free of duty, your invoice will generally include the following notice:

    Not to be used, or supplied, for transport use. Penalties apply.
    Attention

    Penalties apply if you use or supply LPG that is free of duty for transport use.

    End of attention

    Example: LPG supplied free of duty

    Universal LPG delivers bulk LPG to Outback Mining. Outback Mining uses the LPG to fuel their electricity generator.

    Universal LPG does not pay duty on the LPG because it is supplied for non-transport use. Therefore, Outback Mining is not entitled to claim fuel tax credits for their non-transport use.

    End of example

    Packagers and suppliers claim the fuel tax credits for duty paid LPG where they either:

    • package it into containers of 210kg capacity or less for non-transport use
    • sell it for transfer to tanks for residential use.

    Example: Fuel tax credits claimed earlier in the supply chain

    Gas Tank Ltd acquire bulk duty paid LPG for both transport and non-transport use. They package some of it into small nine kilogram LPG gas bottles, which they sell to a service station. The service station then sells the LPG gas bottles to its customers.

    On 24 December 2011, David buys two LPG gas bottles from the service station. He uses one bottle for his barbecue and the other for his patio heater.

    Because Gas Tank Ltd packaged the duty paid LPG into containers of 210 kilograms or less for non-transport use, Gas Tank Ltd are entitled to fuel tax credits at the rate of 2.5 cents per litre.

    Therefore, David is not entitled to claim fuel tax credits for the LPG gas bottles as they have already been claimed by the packager.

    End of example

    You cannot claim fuel tax credits for duty paid gaseous fuels used in a light vehicle with a GVM of less than 4.5 tonne travelling on a public road – such as a taxi, car or small van.

    Attention

    Gaseous fuel you use to power auxiliary equipment of a heavy vehicle travelling on a public road – such as powering the refrigeration unit of a refrigerated vehicle – is not reduced by the road user charge. You may be able to correct previous claims as a result of this change. For more information about this change, see Fuel used to power auxiliary equipment.

    End of attention

    Conversion rates

    If you measure LPG in kilograms or CNG in megajoules, standard conversion rates are provided to help you calculate your fuel tax credit entitlement. The rates are:

    • 1 kilogram of LPG = 1.885 litres of LPG
    • 1 megajoule of CNG = 0.01893 kilograms of CNG.
    Attention

    You can only use the conversion rate for LPG if you measure the LPG using equipment other than volumetric measurement equipment.

    End of attention

    Example: LPG conversion

    Paul owns a farm that uses LPG to dry his grain. He acquires his LPG by the kilogram. In December 2011, he acquires 4,000 kilograms of duty paid LPG for use in his grain dryer.

    He is entitled to fuel tax credits at 2.5 cents per litre for the duty paid LPG. So he can claim his fuel tax credits, Paul converts the 4,000 kilograms of eligible LPG to litres as follows:

    4,000kg × 1.885 = 7,540 litres of duty paid LPG.

    End of example

    Fuel blends

    You are entitled to fuel tax credits as if the fuel you are using is entirely diesel, if both of the following apply:

    • your fuel is a blend of diesel and biodiesel
    • it contains 20% or less biodiesel.

    You are entitled to fuel tax credits as if the fuel you are using is entirely petrol, if both of the following apply:

    • your fuel is a blend of petrol and ethanol
    • it contains 10% or less ethanol.

    For other blends of two or more fuels, fuel tax credits are calculated using the proportion of each taxable fuel.

    Attention

    If you acquired alternative fuel before 1 July 2010, you may also receive an energy grant for the alternative fuel component of the fuel blend under the energy grants credits scheme.

    End of attention

    The fuel grant rate for alternative fuels reduced to zero on 1 July 2010. You cannot claim a grant for fuels purchased on or after that date.

    Further information

    For more information, refer to Energy grants credits scheme – reduced to zero.

    For more information about fuel blends, refer to Fuel tax credits – fuel blends.

    End of further information
      Last modified: 18 Jul 2013QC 26645