Fuel Tax Credits on the Farm: Get the Rate Right

ATO & Compliance

The fuel tax credit rate is set by the day you bought the fuel, not the day you used it or the day you lodged.

Temporary fuel excise relief ended on 2 August 2026. That means fuel tax credit rates changed part way through the July to September quarter.

If your BAS period spans that date, one claim now needs two rates. Most farms burn a lot of diesel between July and September, so it's worth getting this right.

Quick reality check The ATO says to use the rate that applied when you acquired the fuel. It may not be the rate in effect when you use the fuel or when you lodge.

What Changed on 2 August

The Government reduced fuel excise for a period, and that relief ended on 2 August 2026. Fuel tax credit rates followed, and the ATO now publishes separate rate tables for fuel acquired before and after that date.

For most farm businesses, that means three rate buckets to keep straight.

• Bought 1 July to 2 August. The rate that applied while excise relief was still in place.
• Bought from 3 August. The current rate for 2026-27, indexed in August.
• Heavy vehicles on public roads. A lower rate, because the road user charge reduces the credit.

What Your Records Need to Show

The ATO expects records that back up both the litres and the rate. For farms, that usually means the following.

• Type, date and quantity of fuel acquired. Tax invoices, bank statements and fuel supplier statements all count.
• How the fuel was used. Machinery, on-farm vehicles and road use are separate activities, and any private or ineligible use is left out.
• The rate you applied and how you worked out the claim.
• Records kept for five years. GPS and telematics data, service records and fuel issue records can all help show where the fuel went.

Registration, Claim Window and Tax

You need to be registered for both GST and fuel tax credits before you claim. Claims go through your BAS, and you have four years from the date the BAS for that period was due.

Fuel tax credits you receive are assessable income, so they go in your tax return. It's worth keeping them visible in the books. If you claim less than $10,000 a year, the ATO allows a simplified approach to records and calculations.

What This Means for You

Splitting fuel by purchase date and by activity does more than get the claim right. It also shows what each enterprise costs to run.

Cattle, cropping and agistment burn fuel differently. When the fuel sits in the right place in Xero, your enterprise profitability reflects that.

If your fuel records are up to date and split properly, the Q1 BAS gets a whole lot easier.

Not Sure How Your Fuel Is Split?

Get in touch with the AgBooks team. We work exclusively with farm businesses across Australia, on Xero and Figured, built by someone who actually runs a farm.

Book Your Discovery Call

Rates and dates checked against ATO fuel tax credit pages as at 8 October 2026. Rates are indexed every February and August, so confirm the current rate with the ATO fuel tax credit calculator before you claim. All or any advice contained in this article is of a general nature only and may not apply to your individual business circumstances. For specific advice relating to your situation, please contact your accountant or the AgBooks team.