Fuel tax credits – are you optimising your entitlement in your construction business

In the construction world, every dollar counts, including the ones hiding in your fuel tank. Whether you're operating bobcats, ride-on mowers, or other off-road machinery, Fuel Tax Credits (FTC) can offer a powerful way to reclaim costs and boost your bottom line. 

These credits are designed to refund the fuel tax paid on eligible business use, particularly for vehicles and equipment that don’t travel on public roads. Yet, many construction businesses either overlook these claims or underestimate their value, leaving thousands of dollars unclaimed every year.

Fuel is one of the biggest operational costs for businesses. But before you can claim back those costs, you need to know how FTC works, what equipment qualifies and the process for making a claim. 

What are Fuel Tax Credits?

FTC is a government initiative that enables businesses to claim back the fuel tax (excise or customs duty) paid on fuel, provided the fuel was used for eligible business activities. It is designed to help reduce the cost of fuel for businesses especially those that rely on fuel-powered equipment as part of their daily operations.

For example, if your business uses diesel to power a bobcat on a construction site, you may be entitled to claim a credit for the fuel tax paid on that usage.

The amount you can claim depends on:

• The type of fuel used (e.g., diesel, petrol, biodiesel)
• How and where the fuel is used (on-road vs. off-road)
• The date the fuel was acquired, as rates can change over time

Who is eligible to claim FTC?

To qualify, businesses must be registered for both GST and FTC, and they must keep accurate records of fuel purchases and usage. Claims are made through the Business Activity Statement (BAS).

You can claim FTC for eligible fuels you use in eligible business activities in the following categories:

• On a public road (limitations apply and the rate is lower.) For example:
  • Heavy vehicles with a Gross Vehicle Mass (GVM) greater than 4.5 tonnes
  • Powering auxiliary equipment (qualifies for the higher off-road rate)
• Off-road, for example:
  • On private roads - Light vehicles operating off public roads or on private property; Machinery, plant, and equipment
  • Off public roads - Light vehicles operating off public roads or on private property
  • For non-fuel uses

FTC benefits for construction businesses

For construction and real estate businesses, this can mean significant savings by directly reducing operating costs, especially when using machinery and equipment that operate off public roads.

Every litre of fuel used off-road or in auxiliary equipment represents an opportunity to recover part of the tax paid at the pump. Over time, these credits can add up to thousands of dollars in savings.

Claiming FTC encourages better fuel tracking and operational awareness.

Beyond the financial benefit, claiming FTC also encourages better fuel tracking and operational awareness. Businesses that take the time to understand their fuel usage often discover inefficiencies or opportunities to streamline processes. 

It also promotes compliance and transparency, which are increasingly important in today’s environment.

Whether you’re managing a small landscaping business or overseeing large-scale property developments, FTC can help you stretch your budget further.

Fuel used in the following equipment commonly used in the construction sector generally qualify for FTCs

For construction and real estate businesses, fuel-powered machinery is part of the daily operations. Here are some common examples of fuel use that would typically qualify for an FTC claim.

• Bobcats and skid steers used for site prep, trenching, or landscaping.
• Ride-on mowers used for maintaining large property grounds and landscaped areas.
• Excavators, backhoes and trenchers used in digging, foundation work and utility installation.
• Graders and compactors for levelling and soil compaction.
• Loaders and bulldozers for moving earth, debris and materials on-site.
• Concrete mixers and pumps operating on construction sites for slab pours and structural work (an apportionment of the fuel between the two rates could be required.)
• Cranes and hoists used for lifting materials and equipment on private property.
• Generators powering tools, lighting or site offices.
• Forklifts operating exclusively within construction sites or property developments.
• Portable air compressors used to power tools like jackhammers and nail guns.
• Fuel used in transporting materials within a private worksite.

How do I claim FTCs?

Once you’ve identified that your business activities and equipment qualify for FTCs, the next step is knowing how to actually claim them. 

By following a few straightforward steps, you can ensure your claims are accurate, compliant and maximised for value. Remember to reach out to your local RSM adviser for assistance at any stage of this process.

Step 1 – Confirm your eligibility

Make sure your business is registered for both GST and FTC with the ATO.

Step 2 – Track your fuel acquisitions and usage

Keep detailed records of:

• Fuel purchase dates and receipts.
• Type of fuel (e.g., diesel, petrol).
• Equipment or machinery it was used in.
• Purpose and location of use.
• Litres used for eligible activities.
• Fuel cards/ statements or fuel tagging systems simplify compliance with this requirement.

Step 3 – Check the current FTC rates

Visit the ATO website to find the latest FTC rates. These rates vary depending on:

• The type of fuel
• How the fuel is used (e.g., off-road machinery vs. on-road vehicles)
• The date the fuel was acquired
  It is important to use the rate when the fuel was acquired not the rate when the fuel was used.

Step 4 – Calculate the claimable amount

Use this formula:

Eligible Litres × Applicable FTC Rate = Claim amount

Example: 1,000 litres × 48.8 cents = $488

Step 5 – Lodge your claim via BAS

Include your FTC claim in your Business Activity Statement (BAS) under the relevant section (label 7D on the BAS). This is typically done quarterly or monthly, depending on your reporting cycle.

Step 6 – Keep records for five years

Store all supporting documentation, including:

• Fuel receipts
• Usage logs
• Calculation methods
• Any apportionment details (if fuel is used for both eligible and ineligible purposes, or both rates apply to one acquisition of fuel)

Real-life example: The missed opportunity

Dave is the owner of a small earthworks business in regional Western Australia. For years, Dave operated his bobcat on private construction sites, spending around $300 per week on diesel. 
Like many small business owners, he wasn’t aware that he could claim FTCs for the fuel used in his off-road equipment.

With the June 2025 FTC rate of 49.6 cents per litre, and an average diesel price of $2.00 per litre, he could have claimed back approximately $74.40 of FTCs per week. 
Over the course of a year, that adds up to $3,868.80* in potential savings. That is money that could have gone towards equipment maintenance, staff wages or growing his business. 

*Please note this is an estimate only, and the FTC rate changes up to three times a year.

Claim FTC and avoid leaving money in the fuel tank

For construction and real estate businesses, FTC offers a practical and often overlooked opportunity to reduce costs and improve cash flow.

Every litre of diesel used off-road is a chance to recover part of the tax you’ve already paid. Too many businesses leave this money sitting in the tank—unclaimed, unnoticed and unused. These days, that’s a missed opportunity you can’t afford. So, take the time to understand your eligibility, get your records in order, and start making your fuel work harder for you.

Contact your local RSM adviser today to find out how we can help you maximise your Fuel Tax Credit claim and deliver real savings for your business.