If you are in the transport industry, the one bill that will really make you wince every time you look at it is your fuel bill. Fuel costs – big time. But there is no real way to get around it, since it is literally the lifeblood of the entire industry. While we can take steps to make its use as efficient as possible, the reality is that the fuel bill is always going to be a massive slap in the face every single month.
Of course, it doesn’t just affect transport. Fuel costs are a massive issue for everyone from forestry to agriculture to tourism to fisheries to mining. In fact, anyone that relies on the use of heavy machinery to power their business is looking at their fuel costs and wondering how to knock them down. Not helping all of this is the fact that tax accounts for anywhere between 13 and 40c per litre when it comes to what you pay at the pump depending on what fuel you need.
So… up pops the Government with an offer to help. The fuel tax credit scheme exists to remove the effect of fuel tax on business inputs in much the same way GST operates. Fuel excise was actually introduced in Australia in the 1920s for the specific purpose of road construction and maintenance, and has remained a feature of the Australian tax system ever since. The fuel tax credit system was introduced in 2006 and credits are now available to all businesses, all across Australia. It’s simple enough in theory. You pay the excise at the pump, and you get it refunded through your Business Activity Statements. Why? Because excise is an implicit road-user charge that applies to public roads. It is not meant to apply to private roads, or private property or using fuel to do something like electricity or heat generation.
And that is where it gets tricky. For transport operators in particular, fuel use and its purpose can vary quite dramatically. Working out when and where the fuel credit applies can be time-consuming and difficult stuff. Understate it, and you can be paying a lot more for fuel than you should. Overstate it, and you will have the ATO breathing down your neck faster than you say ‘diesel’. The complexity and time involved in the process (and the lack of in-house resources) means that almost everyone errs on the side of caution and under-claim their entitlements. That is why tax specialists offer some sort of consulting service to help transport operators figure out what those fuel credits should be and how they should go about claiming them and proving they deserve them. The only problem with that is that the fees involved obviously mitigate the refund and you still can’t be entirely sure you are getting everything you are entitled to.
But, as so often happens in this day and age, technology has now come to the assistance of the beleaguered truckie and anyone else for whom fuel tax credits matter.
Vehicle telematics which offer remote, real-time and retrospective, monitoring of a vehicles locations and movements are now being used to drive better fuel tax credit refund results. Companies, such as Nuonic, can automatically work out the type of fuels being used, when it was acquired, and what it was used for across your entire fleet using GPS, telemetry and other business data sourced from your existing in-vehicle and business systems. It is a massive game changer.
For the first time, you can precisely calculate your entitlement to fuel tax credits because you know every key metric like fuel consumption, idling time, activity, and private property operation in real time. All that time spent trying to work it out in the past is now replaced by automated reporting that already meets the ATO’s criteria.
So, if you haven’t looked in to it before I urge you to do some research on this exciting new development and see if these advanced analytical tools are the answer to your fuel tax credit nightmares.