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Calculating fuel tax credits for bunker fuels

How to calculate fuel tax credits for bunker fuels and know what records you need to keep.

Published 27 November 2024

Calculating fuel tax credits

Fuel tax credits are calculated by multiplying the amount of eligible fuel by the rate on the day you acquired or imported the fuel:

  • Amount of fuel × applicable rate = fuel tax credit.

For more information on fuel tax credit rates, see Rates – business.

You're limited to the fuel tax (excise or customs duty) applicable to the fuel (litres or kilograms) you acquired or imported.

Amount of eligible fuel (volume)

Fuel expands and contracts with temperature. To compensate for this fluctuation and ensure consistency, excise duty is paid by the fuel supplier at a temperature corrected volume of 15 degrees Celsius (also referred to as the standard temperature). The temperature corrected volume is the amount of eligible fuel.

Records for bunker fuels

You need to keep records to support your fuel tax credit claims. These records include your:

Bunker delivery note

A bunker delivery note (or bunker note) is a document that must be provided with the delivery of bunkers from a supplier to a customer. The bunker delivery note must include the:

  • quantity in metric tonnes
  • density at 15 degrees Celsius.

Many suppliers also include the measured litres.

Invoices

A tax invoice details sale information from the supplier to the customer. The supplier may include extra information which can assist in your fuel tax credit calculation.

Example 1(a): bunker fuel on domestic voyage – licensed supplier

Arnold Shipping, an Australian domestic freight forwarding company, acquires bunkers in Melbourne for their ship, the MV Astrid, which is 822 gross tonnes, for deliveries to Perth, and then Darwin.

Arnold Shipping receive an invoice for 500,000 L of bunker fuel from their licensed fuel supplier, Caraher Fuels Pty Ltd.

Figure 1 Caraher Fuels Pty Ltd tax invoice

Caraher Fuels Pty Ltd ABN 32 123 456 789 Date 3 January 2025 to Arnold Shipping Pty Ltd, 123 Andrew Street, Sydney NSW 2000. Invoice number 445566 due date 2 February 2025. Supply date 2 January 2025, product description diesel bunkers, quantity 500,000 litres, pricing date 2 January 2025, unit price $1.15, amount exclusive of GST $575,000, GST amount $57,500, amount inclusive of GST $632,500, excise unit price 0.506 cents, Total $632,500. GMV over 400 tonnes – qualifies for automatic remission of duty – no excise applied to fuel – not eligible for fuel tax credits.

The MV Astrid is eligible for an automatic remission because the following apply:

  • it's over 400 gross tonnes
  • the bunker fuel was supplied from a licenced supplier, is subject to duty, and is used for
    • powering the ship
    • the purpose of carrying on a business.

This meant Caraher Fuels Pty Ltd could supply the fuel duty free, which is stated on the invoice.

End of example

Example 1(b): bunker fuel on domestic voyage – additional non-licensed supplier

In Darwin, Arnold Shipping acquires more bunkers from Mahmoud Fuels Pty Ltd, who aren't an excise licensed fuel supplier. The contract for supply is based on a fixed unit price measured at ambient temperature which is inclusive of excise duties, supply charges, port charges and other costs. Arnold Shipping receives an invoice showing that there was excise paid and a bunker delivery note.

Figure 2 Mahmoud Fuels Pty Ltd tax invoice

Mahmoud Fuels Pty Ltd ABN 32 321 987 654 Date 27 January 2025 to Arnold Shipping Pty Ltd, 123 Andrew Street, Sydney NSW 2000. Invoice number 642296B due date 27 January 2025. Supply date 27 January 2025, product description fuel oil, quantity at ambient temperature 500,000 litres, pricing date 27 January 2025, unit price $1.70, amount exclusive of GST $850,000, GST amount $85,000, amount inclusive of GST $935,000, Total $935,000. Ship supplied MV Astrid GMV 822 tonnes. Excise duty paid.

Figure 3 Mahmoud Fuels Pty Ltd bunker delivery note

Australian Government – Australian Maritime Safety Authority official bunker delivery note. Name and IMO number of receiving ship MV Astrid IMO 4426997, Port Darwin, Date of commencement of delivery 27 January 2025, Name, address and telephone number of marine fuel oil supplier Mahmoud Fuels, 123 Limongelli Drive, Darwin Phone 03 4444 4444. Product name marine oil fuel, quantity 400,000 metric tons, 850 density at 15 degrees celcius kilograms per cubic metre, 0.988 sulphur content mass percent, flashpoint 179 degrees celsius.

When Arnold Shipping prepare their BAS, they review their eligibility for fuel tax credits. As they didn't have to pay duty on the purchase from Caraher Fuels Pty Ltd, they can't claim fuel tax credits on that fuel.

As Mahmoud Fuels Pty Ltd isn't an excise licensed supplier, duty was charged for the supply. The fuel is eligible for a fuel tax credit because the bunker fuel was purchased for the carrying on of a business.

Arnold Shipping know that they can claim a credit for the effective fuel tax that was paid on the fuel, which is calculated using the temperature corrected volume of fuel, multiplied by the rate on the day it was entered for home consumption.

To work out the correct amount of duty paid, they check their bunker delivery note and divide the quantity in metric tonnes by the density of the fuel at 15 degrees Celsius to calculate the number of litres acquired corrected to 15 degrees Celsius, which is 470,588 litres.

They then check our website and confirm the correct duty rate is 50.6 cents for the period when they acquired the fuel. After multiplying these figures together, Arnold Shipping calculate their fuel tax credit claim is $238,117.00.

End of example

Example 2: claiming fuel tax credits on bunker fuels for a fishing boat

Alex Trawlers receives the following invoice for the supply of bunker fuel for their fishing boat, the MV Shelly Turtle, from Jungs Fuel Supplies Pty Ltd.

Figure 4 Jungs Fuel Supplies Pty Ltd tax invoice

Jungs Fuel Supplies Pty Ltd ABN 32 422 766 411 Date 1 January 2025 to Alex Trawlers Pty Ltd, 42 Scofield Street, Sydney NSW 2000. Invoice number 987321 due date 1 January 2025. Supply date 1 January 2025, product description diesel bunkers, quantity 30,000 litres, pricing date 1 January 2025, unit price $1.15, amount exclusive of GST $34,500, GST amount $3,450, amount inclusive of GST $37,950, excise quantity 30,000 litres, unit price 0.506 cents, amount exclusive of GST $15,180, GST amount $1,518, amount inclusive of GST $16,698, Total $54,648. Ship supplied MV Shelly Turtle GMV under 400 tonnes - does not meet eligibility for automatic remission of duty, duty applied.

Alex Trawlers has a contract with Jungs Fuel Supplies Pty Ltd to supply and invoice their fuel, temperature corrected to 15 degrees Celsius. As the trawler is under 400 gross tonnes, excise duty is correctly applied stated on the invoice.

Alex Trawlers is entitled to claim a fuel tax credit as excise duty has been paid and the fuel was used for carrying on their business. As their contract states their supply and invoice is based on the temperature corrected volume, they can use the figures in the invoice for their claim.

End of example

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