You can claim fuel tax credits for fuel blends. The rate you can claim depends on the amount of biodiesel or fuel ethanol in each blend.
From 1 July 2016, increased excise duty rates took effect for biodiesel and fuel ethanol manufactured in Australia.
Common blends
There are two common fuel blends, diesel and petrol blends.
Diesel blends
Blends of biodiesel and diesel with 20% or less biodiesel (for example B5 or B20), are considered to be 100% diesel and you can claim fuel tax credits at the diesel rate on the entire amount.
Petrol blends
Blends of fuel ethanol and petrol with 10% or less ethanol (for example E10) are considered to be 100% petrol and you can claim fuel tax credits at the petrol rate on the entire amount.
See also:
Other fuel blends
You may be using a fuel blend that is not invoiced as one of the commonly used blends of B5, B20 or E10, for example B30. The fuel tax credit rate will depend on the blend ratio.
From 1 July 2016, if you:
- import and pay customs duty on biodiesel or fuel ethanol and then use it in blends not invoiced as B5, B20 or E10, you can claim fuel tax credits on all the components of the blend. For fuel tax credit purposes these fuels are treated as if they are manufactured in Australia. The fuel tax credit rate for the imported biodiesel and ethanol component is the excise duty rate that applies to domestic biofuel blends.
- use a blend that contains more than 20% biodiesel or more than 10% ethanol, you can claim fuel tax credits on both components of the blend.
You must have documentation showing the proportion of each fuel in the blend before you work out your fuel tax credits.
To work out your fuel tax credits for these blends, you must first work out the proportion of eligible fuel (for example, diesel or petrol) and then multiply this amount by the applicable fuel tax credit rate for each component of the blend.
For example, if you acquire for business use:
- fuel ethanol invoiced as E85, you can claim fuel tax credits at the E85 rate in the rates table under 'Blended fuels'
- fuel ethanol sold as E85, but you have documentation (for example, from the supplier) that shows the fuel contains 20% petrol and 80% ethanol, you can claim fuel tax credits for each component using the rate that applies
- a biodiesel blend and the invoice states it is a blend containing 40% biodiesel and 60% diesel, you can claim fuel tax credits for each component of the blend using the applicable rate.
Special rules apply to other blends, such as blends used for heavy vehicles travelling on public roads.
See also:
Example: Use of a B30 blend in machinery on a construction site
Fuel tax credit rates change regularly. Check the rates before completing your calculation.
Keyser uses a blend of 30% biodiesel and 70% diesel in his machinery on a construction site. He has sufficient documentation confirming this blend ratio.
In July 2021, Keyser purchases 10,000 litres of that fuel for use in his machinery.
Keyser is entitled to claim fuel tax credits for both the diesel and biodiesel portion of the fuel he uses in his machinery on the construction site.
The rate for diesel in July 2021 was 42.7 cents per litre and the rate for biodiesel was 8.5 cents per litre.
He calculates the fuel tax credits for this fuel as follows:
Fuel tax credits on the diesel portion |
(10,000 litres × 70%) × $0.427 per litre = $2,989.00 |
Fuel tax credits on the biodiesel portion |
(10,000 litres × 30%) x $0.085 per litre = $255.00 |
Fuel tax credit entitlement |
$2,989.00 + $255.00 = $3,244.00 |
End of example
Blends used for heavy vehicles travelling on public roads
If you use a blended fuel in a heavy vehicle for travelling on public roads, you must work out the road user charge (RUC) on the entire quantity of fuel when calculating your fuel tax credits. The RUC applies to the whole quantity of fuel used for travelling on public roads even if you are only entitled to claim fuel tax credits for a portion of the fuel blend.
Heavy vehicles have a GVM greater than 4.5 tonnes. Diesel vehicles acquired before 1 July 2006 can equal 4.5 tonnes GVM.
Fuel you use to power auxiliary equipment of a heavy vehicle travelling on public roads (such as powering the refrigeration unit of a refrigerated trailer) is not reduced by the RUC. You can claim fuel tax credits at the rate for the fuel blend you use in your business.
See also:
Example: Use of a B30 blend in a heavy vehicle
Fuel tax credit rates change regularly. Check the rates before completing your calculation.
Raj uses a blend of 30% biodiesel and 70% diesel in his trucks for travelling on public roads. He has sufficient documentation confirming this blend ratio.
In July 2021, Raj purchases 10,000 litres of that blend for use in his trucks.
Raj is entitled to claim fuel tax credits for the diesel and biodiesel portion of the fuel he uses in his trucks for travelling on public roads. The rate for diesel in July 2021 is 42.7 cents per litre and the rate for biodiesel is 8.5 cents per litre. Raj must calculate the RUC on the entire quantity of fuel, including the biodiesel portion. From 1 July 2021, the RUC is 26.4 cents per litre.
He calculates the fuel tax credits for this fuel as follows:
Fuel tax credits on the diesel portion |
(10,000 litres × 70%) × $0.427 per litre = $2,989.00 |
Fuel tax credits on the biodiesel portion |
(10,000 litres × 30%) × $0.085 per litre = $255.00 |
RUC on the entire fuel |
10,000 litres × $0.264 per litre = $2,640.00 |
Fuel tax credit entitlement |
($2,989.00 + $255.00) − $2,640.00 = $604.00 |
There may be circumstances where the RUC, when calculated on the entire quantity of fuel, exceeds any fuel tax credit entitlement. In those circumstances the fuel tax credit amount is nil.
End of exampleDefinitions
Biodiesel: mono-alkyl esters of fatty acid of a kind used as a fuel, derived from animal or vegetable fats or oils whether or not used.
B5: a blend of biodiesel and diesel that contains no more than 5% biodiesel.
B20: a blend of biodiesel and diesel that contains no more than 20% biodiesel.
Ethanol: this becomes fuel ethanol when it is denatured for use in an internal combustion engine. Denaturing means the ethanol is chemically treated to make it unfit for human consumption by the addition of 1% or more of unleaded petrol or another denaturant that meets the requirements of Excise (Denatured spirits) Determination 2016 (No. 3)External Link
E10: a blend of fuel ethanol and petrol that contains no more than 10% ethanol.
E85: a blend of fuel ethanol and petrol that generally contains more than 70% but no more than 85% ethanol.
You can claim fuel tax credits for blended fuels, including common fuel blends, certain other fuel blends and fuel blends used for heavy vehicles for travelling on public roads.