• Service: Tax, Indirect Tax
  • Type: Business and industry issue, Regulatory update
  • Date: 29/07/2014

Tax Insights

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Michael McAuliffe

Michael McAuliffe
Senior Manger, Indirect Tax

+61 3 9288 5852

Carbon tax repeal and fuel excise indexation: getting it right 

by Michael McAuliffe, Indirect Tax Specialist
Fuel tax credits are once again getting a shakeup as a result of the repeal of the carbon tax and re-introduction of fuel excise indexation. The carbon tax has been repealed effective 1 July 2014 while the fuel excise indexation legislation has not yet been introduced into Parliament. Both of these changes will increase the complexity of calculating fuel tax credit entitlements.

The carbon tax repeal results in increased fuel tax credits for liquid fuels (e.g. diesel and petrol) and transport gaseous fuels in off-road activities and no fuel tax entitlement for non-transport gaseous fuels. Importantly, new fuel tax credit rates apply to all fuel acquired, produced or manufactured from 1 July 2014. Therefore, when calculating fuel tax credits the date of acquisition/import of the fuel must be determined rather than the date of use.


Fuel tax credit rates, effective 1 July 2014 are as follows:


Liquid Fuels (petrol and diesel)

In a heavy vehicle (GVM <4.5t) for travelling on public roads  

12.003 cpl *

Off-road activities

38.143 Cpl

Transport Gaseous Fuels

Heavy vehicle (GVM <4.5t) on public roads


Off-road - Duty paid LPG – transport

10 cp

Off-road - Duty paid LNG or CNG – transport

20.9 cents / kg

* No change – as there is no increase in the Road User Charge



The substantial difference in on-road versus off-road rates requires greater care in assessing where vehicles and equipment are located when consuming fuel.


Fuel excise is also proposed to be re-indexed in line with changes in the Consumer Price Index. This will involve six monthly changes to fuel excise rates and a corresponding increase in fuel tax credit rates. If legislation is passed, the new excise rates will likely apply from 1 February 2015.


Now is a perfect time for claimants to consider whether they are taking full advantage of fuel tax credit entitlements and to review existing processes and procedures.


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