Updates to Fuel Tax Credit Rates for Business and Non Business

ATO Updates fuel tax credit rates from 4 August 2025

The Australian Taxation Office (ATO) has released the indexed Fuel Tax Credit (FTC) rates for the 2025–2026 financial year, effective from 4 August 2025. This guide provides a detailed breakdown of the new rates for both Business and Non-Business claimants, emphasizing the critical need to update accounting systems immediately to ensure compliance and maximize tax refunds.

I. Introduction

The Fuel Tax Credit (FTC) scheme is a crucial financial mechanism provided by the Australian Taxation Office (ATO). It allows eligible entities to claim a credit for the fuel tax (excise or customs duty) included in the price of fuel used in business activities and qualifying non-business activities (such as emergency services and domestic electricity generation).

To maintain accuracy in claims, the ATO adjusts FTC rates twice yearly (typically in February and August) based on the Consumer Price Index (CPI) and changes to the Road User Charge (RUC).

This guide provides a detailed breakdown and analysis of the new FTC rates for the 2025–2026 financial year. The rates are split into two periods due to the indexation adjustment in August 2025. Claimants must use the rate applicable to the date the fuel was acquired.

II. The Latest Fuel Tax Credit Rates (2025–2026)

Rates are distinctly separated based on the nature of the activity and the type of vehicle using the fuel.

a. FTC Rates for BUSINESS Purposes

These rates apply to fuel used in general business operations (excluding non-eligible uses).

Period 1: 1 July 2025 to 3 August 2025 (Pre-Indexation)

Eligible Fuel Type	Unit	Heavy Vehicle (Travelling on Public Roads)	All Other Business Uses (Off-Road / Auxiliary Equipment)
Liquid Fuels (Diesel, Petrol)	cents/litre	18.4	50.8
Blended Fuels (B5, B20, E10)	cents/litre	18.4	50.8
Blended fuel: E85	cents/litre	0	21.73
Biodiesel (B100)	cents/litre	0	16.9
Liquefied Petroleum Gas (LPG)	cents/litre	0	16.6
Liquefied/Compressed Natural Gas (LNG/CNG)	cents/kg	0	34.8

Period 2: From 4 August 2025 Onwards (Post-Indexation)

Eligible Fuel Type	Unit	Heavy Vehicle (Travelling on Public Roads)	All Other Business Uses (Off-Road / Auxiliary Equipment)
Liquid Fuels (Diesel, Petrol)	cents/litre	19.2	51.6
Blended Fuels (B5, B20, E10)	cents/litre	19.2	51.6
Blended fuel: E85	cents/litre	0	22.105
Biodiesel (B100)	cents/litre	0	17.2
Liquefied Petroleum Gas (LPG)	cents/litre	0	16.9
Liquefied/Compressed Natural Gas (LNG/CNG)	cents/kg	0	35.4

b. FTC Rates for NON-BUSINESS Purposes

These rates apply to non-profit organisations, emergency services, and individuals using fuel for domestic electricity generation.

Period 1: 1 July 2025 to 3 August 2025 (Pre-Indexation)

Eligible Fuel Type	Unit	Heavy Emergency Vehicles (Travelling on Public Roads)	Other Non-Business Uses (Emergency equipment, vessels, domestic electricity generation)
Liquid Fuels (Diesel, Petrol)	cents/litre	18.4	50.8
Blended Fuels (B5, B20, E10)	cents/litre	18.4	50.8
Blended fuel: E85	cents/litre	0	21.73
Liquefied Petroleum Gas (LPG)	cents/litre	0	16.6
Liquefied/Compressed Natural Gas (LNG/CNG)	cents/kg	0	34.8

Period 2: From 4 August 2025 Onwards (Post-Indexation)

Eligible Fuel Type	Unit	Heavy Emergency Vehicles (Travelling on Public Roads)	Other Non-Business Uses (Emergency equipment, vessels, domestic electricity generation)
Liquid Fuels (Diesel, Petrol)	cents/litre	19.2	51.6
Blended Fuels (B5, B20, E10)	cents/litre	19.2	51.6
Blended fuel: E85	cents/litre	0	22.105
Liquefied Petroleum Gas (LPG)	cents/litre	0	16.9
Liquefied/Compressed Natural Gas (LNG/CNG)	cents/kg	0	35.4

Note on Road User Charge (RUC): The RUC for 2025–2026 is 32.4 cents/litre for liquid fuels and 43.2 cents/kg for gaseous fuels. This charge reduces the credit claimable for fuel used on public roads. For gaseous fuels, the RUC currently reduces the FTC rate to nil for public road travel.

III. Analysis and Key Benefits

1. Maximising Tax Refund (Business Focus)

The rate increase for "All Other Business Uses" (from 50.8 c/L to 51.6 c/L) post-August 4th represents a direct financial benefit. Businesses must ensure their accounting systems clearly differentiate between fuel purchases made before and after the adjustment date to capture the higher refund rate accurately.

2. The Impact of the RUC (Applies to both Business and Non-Business)

The RUC is the key factor causing the lower credit rates for heavy vehicles on public roads. This means:

• Highest Rates apply consistently to off-public-road activities (e.g., generators, mining equipment, farming machinery, auxiliary power).

• Nil Rates (0) apply to gaseous fuels (LPG, LNG, CNG) used on public roads, as the RUC currently negates the entire fuel tax component.

3. Special Compliance for Non-Business

Non-profit and emergency services must pay careful attention to the specific rules, particularly regarding domestic electricity generation. Claimants should confirm eligibility and ensure they are not claiming for fuel that a supplier has already claimed credit for.

IV. Mandatory Actionable Steps

To ensure compliance and maximize your claim, organizations and individuals should take these immediate steps:

1. System Updates: Immediately program or update accounting software and internal calculation spreadsheets with the new rates effective from 4 August 2025.

2. Meticulous Record Keeping: Maintain clear documentation of the date of acquisition, volume, fuel type, and the specific purpose of use (e.g., "Farm generator" vs. "Heavy haulage vehicle on public road").

3. Utilise ATO Tools: Regularly use the ATO's online Fuel Tax Credit Calculator to simplify the process and minimize the risk of compliance errors, especially when dealing with split-rate periods.

V. Conclusion

Proactive management of the ATO’s bi-annual FTC rate indexation is crucial. By clearly distinguishing between Business and Non-Business activities and between 'on-road' and 'off-road' fuel use, claimants can successfully manage their compliance obligations, accurately navigate the RUC rules, and maximise their rightful tax refund for the 2025–2026 financial year.