Reintroduction of full fuel excise – what this means for you

For petrol and diesel, fuel excise will be reinstated at 46.0 cpl, which represents a 23.0 cpl increase on the current reduced rates.

This will mean that businesses and individuals will see the price of fuel go up at the pump. But what does this increased cost of fuel mean for businesses claiming Fuel Tax Credits (FTCs)?

Who will be impacted?

Individuals

• All fuel uses – Increase in fuel costs of 23.0 cpl

Business

• Light vehicles travelling on public roads – Increase in fuel costs of 23.0 cpl
• Heavy vehicles travelling on public roads – Increase in fuel costs of 4.2 cpl
• Vehicles travelling on private roads – No net increase in fuel costs
• Non-vehicle use (auxiliary, machinery, plant and equipment) – No net increase in fuel costs

Businesses operating vehicles on public roads

Businesses operating vehicles on public roads will see an increase in fuel costs due to the reinstatement of full fuel excise.

During the temporary halving of fuel excise, businesses operating vehicles on public roads were not entitled to claim a FTC, however, they benefited from the 23.0 cpl fuel excise reduction. Following the reinstatement of full fuel excise, businesses operating light vehicles on public roads will remain ineligible to claim an FTC, so they will incur an increase in fuel costs of 23.0 cpl. Businesses operating heavy vehicles on public roads will be entitled to claim an FTC of 18.8 cpl, so they will incur a net increase in fuel costs of 4.2 cpl.

There will also be a timing disadvantage for businesses operating heavy vehicles on public roads, given they will now be required to pay the increased fuel excise at the pump, but will need to wait to receive a FTC refund through their Business Activity Statement.

Businesses operating vehicles on private roads and fuel for non-vehicle use

Businesses operating vehicles on private roads or using fuel for non-vehicle use will not see any net financial impact on the reinstatement of full fuel excise. This is on the basis that such businesses have remained entitled to claim 100% of the fuel excise imposed before, during and after the temporary halving of fuel excise. The only difference will be that instead of claiming 23.0 cpl, they will claim 43.0 cpl to reflect the increase in fuel excise.

Whilst this means that there is no change in the overall cost of fuel for these businesses, there will be a timing disadvantage similar to above given they will now be required to pay the increased fuel excise at the pump, but will need to wait to receive a FTC refund through their Business Activity Statement.

What should you do?

If you are a business that currently claims FTCs, it is important that you understand the impact of these changes on your FTC entitlement and adjust your FTC process accordingly.

It is also important to note that while the ultimate financial impact to businesses eligible for FTCs is low, there will be increased fuel costs upon initial acquisition. Businesses should be prepared for this impact on cash flow given FTCs may not be received for 4-10 weeks from the initial acquisition of fuel.

For monthly reporters, the September Business Activity Statement due 21 October will be the first return where the reinstated excise will be included. For quarterly reporters, the September Business Activity Statement due 28 October will include the reinstated excise.

If you have any questions regarding FTCs, or how these changes impact your business, our FTC specialists are happy to support you.