Australian Fuel Tax Credits: BAS Workpapers and Software Design

This note is a structured knowledge outline for understanding Australian Fuel Tax Credits from a BAS, workpaper, and software-design perspective.

It focuses on the legal definition, the evidence needed to support a claim, manual record-keeping standards, software integration options, and the broader market context. It is a summary and index, not tax advice.

1. Legal and regulatory definition

1.1 What are Fuel Tax Credits?

Fuel tax credits allow eligible businesses to claim a credit for the fuel tax, including excise or customs duty, included in the price of fuel used in business activities. The ATO explains that fuel tax credits apply to fuel used in machinery, plant, equipment, heavy vehicles, and certain other eligible business uses. 1

Business.gov.au gives a similar summary: businesses may claim credits for fuel tax included in taxable fuel they purchase, manufacture, or import, provided the fuel is used in business activities. 2

1.2 Who can claim?

A business generally needs to be registered for:

• GST
• Fuel tax credits

Business.gov.au states that a business must be registered for GST and fuel tax credits to claim. It also notes that eligible activities may include machinery, plant, equipment, heavy vehicles over 4.5 tonnes, and light vehicles on private roads rather than public roads. 3

A business may need to register for GST even if turnover is below the usual threshold if it wants to claim fuel tax credits. 4

1.3 What fuel can be claimed?

Taxable fuels may include:

• Liquid fuels
• Fuel blends
• Gaseous fuels

The amount claimable depends on:

• The fuel type
• The date the fuel was acquired
• The business activity in which the fuel was used
• Whether the activity is on-road or off-road
• Whether the vehicle is a heavy vehicle or light vehicle

Business.gov.au highlights these factors in its fuel tax credits guidance. 2

1.4 BAS labels: 7D and 7C

Fuel tax credits are reported in the BAS using these labels:

BAS label	Meaning
7D	Fuel tax credit claim
7C	Fuel tax credit overclaim or decreasing adjustment

ATO guidance explains that the net fuel amount is calculated using 7C minus 7D, and adjustment guidance makes clear that decreasing adjustments go to 7C while increasing adjustments go to 7D. 5

1.5 Xero BAS limitation

Xero does not automatically populate the FTC labels in the Activity Statement:

• 7D: Fuel tax credit
• 7C: Fuel tax credit overclaim

Xero says these values are not populated automatically and need to be calculated and entered manually. 7

Software implication: Xero can provide source transactions, but it usually cannot determine the final fuel tax credit claim amount without additional fuel-usage evidence and apportionment logic.

2. Information and evidence required to support a claim

2.1 Basic claim data

To support a fuel tax credit claim, a business should be able to show:

• Fuel purchase date
• Fuel supplier
• Fuel type
• Quantity purchased, usually litres
• Price and GST information
• Business use
• Eligible activity
• Claim rate used
• Claim calculation

ATO says businesses should keep records from the start of the business activity so they are ready to calculate and claim fuel tax credits. 8

2.2 Fuel purchase evidence

Common source documents include:

• Tax invoices
• Fuel receipts
• Fuel card statements
• Supplier statements
• Bank or credit card records
• Xero bills or spend-money transactions
• Attached invoices in accounting software

The record should support both the fuel acquisition itself and the quantity and type of fuel acquired.

2.3 Fuel usage evidence

Fuel purchase evidence alone is often not enough, because eligibility depends on how the fuel was used.

Useful supporting records include:

• Vehicle ID
• Equipment ID
• Odometer readings
• Engine hours
• Job site records
• Trip logs
• GPS or telematics data
• Private-road or public-road split
• Business-use or private-use split
• Auxiliary equipment usage
• Heavy vehicle classification

ATO states that where fuel is used across eligible and ineligible activities, or across activities with different rates, businesses may use an apportionment method that is fair and reasonable for their circumstances. 9

2.4 Rate evidence

FTC rates change over time. The ATO publishes rate tables by financial year, and businesses need to apply the rate that matches the relevant acquisition period and usage type. 10

ATO also issues updates when rates change, including changes from 1 April 2026 following temporary fuel excise settings. 11

2.5 Adjustments and corrections

Businesses may need to adjust claims where:

• Fuel was used differently from expected
• Fuel was partly used for ineligible activities
• A previous BAS overclaimed fuel tax credits
• An error was found in a previous calculation
• The applicable rate was wrong
• Fuel was not actually used in the claimed activity

ATO says decreasing adjustments go to 7C and increasing adjustments go to 7D. 6

3. Manual record-keeping standards

3.1 Minimum manual worksheet fields

A practical manual FTC worksheet should include:

Field	Purpose
BAS period	Links claim to BAS
Fuel purchase date	Determines applicable rate
Supplier	Supports source tracing
Invoice or receipt number	Audit trail
Fuel type	Determines eligibility and rate
Litres purchased	Base quantity
Vehicle or equipment ID	Usage evidence
Activity type	Heavy vehicle, machinery, off-road, private road, etc.
Eligible percentage	Supports apportionment
FTC rate	Calculation input
Claim amount	7D support
Adjustment amount	7C support
Adjustment reason	Explains corrections
Evidence link	Invoice, fuel card statement, GPS report, or logbook

3.2 Manual calculation structure

A simple manual calculation can be structured as:

Eligible litres = Total litres x Eligible business-use percentage

Fuel tax credit claim = Eligible litres x Applicable FTC rate

Where multiple rates apply in the same BAS period, split the calculation by acquisition date or rate period.

3.3 Recommended supporting folder structure

FTC Working Papers/
  2026-Q1 BAS/
    01 Fuel invoices/
    02 Fuel card statements/
    03 Vehicle logs/
    04 Telematics reports/
    05 Rate reference/
    06 FTC calculation worksheet.xlsx
    07 BAS reconciliation.pdf

3.4 Manual review checks

Recommended accountant review checks:

Check	Purpose
BAS 7D has value but no worksheet	Missing support
Worksheet uses litres but invoice lacks litres	Weak evidence
Fuel expenses exist but no FTC claim	Potential missed claim
FTC claim exists but no fuel expense in Xero	Possible unsupported claim
Large 7C adjustment	Requires explanation
Rate changed during BAS period	Needs split-rate calculation
Light vehicle on public road included	Potential ineligible claim
Private use not apportioned	Overclaim risk

3.5 Simplified methods

ATO provides simplified methods for some businesses to keep records and calculate FTC claims, but the business must still be registered and eligible to claim. 12

4. Existing third-party software and integration potential

4.1 ATO tools

ATO provides fuel tax credit tools to help businesses check eligibility and calculate claim amounts. 13

Integration potential: Low to medium. ATO tools are useful as reference calculators, but they are not usually a full operational data system. They do not automatically know vehicle usage, GPS location, private-road usage, or auxiliary equipment usage.

4.2 Xero

Xero can hold fuel bills, spend-money transactions, contacts, account codes, and invoice attachments. However, Xero does not automatically populate BAS labels 7D and 7C. 7

Integration potential: High for source transaction extraction. Low for final FTC calculation unless another dataset provides litres, vehicle usage, and eligibility information.

Recommended use:

• Extract fuel-related transactions
• Identify likely fuel accounts and suppliers
• Check attachments
• Compare Xero fuel expense totals with FTC worksheet totals
• Store the final BAS 7D and 7C support package

4.3 AccountKit

AccountKit provides a Fuel Tax Credit Calculator. Its support documentation says the tool can calculate FTC claims ready for BAS work and, when connected to Xero, extract fuel details directly from relevant accounts. 14

AccountKit also promotes Xero integration for calculating fuel tax credit claims using data drawn directly from Xero. 15

Integration potential: High for accounting-practice workflows. It appears most useful where the goal is BAS workpaper preparation rather than detailed GPS-based vehicle analysis.

4.4 Teletrac Navman FTC Manager

Teletrac Navman's FTC Manager uses high-definition GPS data from telematics devices to calculate off-road travel and auxiliary fuel use. 16

Its product description also says FTC Manager allows businesses to upload fuel transaction data and automatically calculate claim entitlement with transparent support processes. 17

Integration potential: Medium to high for fleet-heavy clients. Best suited to transport, construction, mining, civil works, and other fleet-based businesses.

Potential integration options:

• Import FTC Manager reports into workpaper software
• Use exported claim summaries as supporting evidence
• Reconcile FTC Manager claim totals to BAS 7D
• Use the report as an external evidence source rather than rebuilding the calculation

4.5 EROAD

EROAD says it automates FTC calculations and claims, helping businesses calculate rebate entitlements and identify backdated rebates. 18

EROAD also provides integration APIs using REST architecture for connecting EROAD data with other business software. 19

Integration potential: High if the client already uses EROAD and has API access. It is a good fit for fleet, transport, and heavy-equipment clients.

Potential integration options:

• API import of vehicle, trip, or fuel data
• Report import
• BAS 7D reconciliation
• Audit evidence indexing

4.6 Prism, MTData, and Smartrak

Prism describes itself as a fuel tax credit automation service for commercial vehicles using telematics. It integrates with leading tracking systems and uses precision analysis to generate detailed fuel apportionments. 20

MTData describes Prism's FTC calculator as using high-frequency GPS data and mapping data covering national road and land features to automate apportionment. 21

Smartrak says the Prism solution uses forensic analytics and proprietary datasets to calculate accurate FTC claims and provide evidence for ATO submission. 22

Integration potential: Medium to high, depending on export or API availability. These tools are best used as specialist external calculation engines.

Potential integration options:

• Import Prism reports as claim evidence
• Reconcile Prism claim amounts to BAS 7D
• Link claim lines to vehicle groups or equipment
• Store the report and calculation summary in the workpaper package

4.7 KPMG, Geotab, and enterprise FTC technology

KPMG offers fuel tax credit services with data-driven solutions for compliance, operational efficiency, and risk mitigation. 23

KPMG and Geotab have also promoted a technology solution to help organisations calculate entitlements for credits on fuel excise used in plant, equipment, heavy vehicles, and certain light-vehicle contexts. 24

ATO has published product and class rulings for some telematics-based FTC methodologies, including examples involving KPMG, Geotab, MTData, Prism, and Navman-related technology. 25

Integration potential: High for enterprise clients, but likely more complex because of commercial arrangements, proprietary methods, and client-specific systems.

5. Overall market summary

5.1 Size and economic importance

Fuel tax credits are a major Australian tax expenditure and credit system. Grattan Institute estimated that fuel tax credits were worth around $8 billion per year to businesses. 26

The Parliamentary Budget Office explains that fuel tax is collected on fuel production and importation and then offset by fuel tax credits for business users. It also notes that the largest claims are concentrated in industries such as metal ore mining, coal mining, and road freight transport. 27

5.2 Main industries

FTC is especially relevant to:

• Mining
• Road freight
• Agriculture
• Construction
• Civil works
• Forestry
• Fishing
• Transport and logistics
• Businesses using heavy vehicles, machinery, plant, or equipment

PBO analysis indicates the largest claims are concentrated in mining and road freight transport. 27

5.3 Compliance risk

ATO estimates a fuel tax credits gap. Its latest estimate for 2023-24 was $345 million, or 3.7 percent, meaning more than 96 percent of FTC was paid correctly by value. 28

That suggests the system is relatively high-compliance overall, but still carries meaningful risk due to:

• Wrong eligibility assumptions
• Wrong rates
• Weak apportionment evidence
• Incomplete records
• Overclaims
• Missed claims

5.4 Accounting-firm adoption

I did not find a reliable public statistic showing the exact percentage of Australian accounting firms that use FTC-specific software.

What is clear is that FTC is already a recognised accounting-practice workflow:

• AccountKit provides a Xero-integrated FTC calculator for accountants and BAS work
• KPMG offers enterprise FTC technology and advisory services
• Telematics providers market FTC automation to fleet-heavy businesses
• ATO publishes guidance for telematics technology providers and product-ruling applicants

Practical conclusion: Adoption appears strongest among larger fleet operators, mining and construction businesses, transport businesses, and accounting firms serving fuel-intensive industries. I did not find a reliable public adoption percentage.

6. Software design implications for BAS workpaper automation

6.1 What accounting software can do

Accounting software such as Xero can help identify:

• Fuel suppliers
• Fuel expense accounts
• Fuel-related bills
• GST treatment
• Invoice attachments
• Payment records
• BAS period transaction totals

But Xero usually cannot determine:

• Eligible litres
• Vehicle weight
• Road type
• Private versus business use
• Auxiliary equipment usage
• Off-road usage
• Correct apportionment
• Final FTC claim amount

This is why Xero does not populate 7D and 7C automatically. 7

6.2 Recommended product workflow

A BAS workpaper product should not try to calculate FTC blindly from accounting transactions alone.

A stronger workflow is:

1. Extract possible fuel transactions from Xero
2. Group them by supplier, account, period, and fuel type
3. Check whether invoice attachments exist
4. Check whether litres are available
5. Ask the user for usage evidence or a third-party FTC report
6. Import or record eligible litres and the applicable rate
7. Calculate the claim amount
8. Reconcile the final FTC worksheet total to BAS 7D and 7C
9. Store supporting evidence for audit

6.3 Suggested workpaper sections

Fuel Tax Credit Workpaper

1. BAS summary
   - BAS period
   - BAS 7D amount
   - BAS 7C amount
   - Net FTC amount

2. Source transactions
   - Xero fuel transactions
   - Fuel card statements
   - Supplier invoices

3. Eligibility classification
   - Vehicle or equipment
   - Activity type
   - Road type
   - Business or private split

4. Rate calculation
   - Fuel acquisition date
   - Applicable ATO rate
   - Eligible litres
   - Claim amount

5. Adjustments
   - 7C items
   - Reason
   - Prior period reference

6. Reconciliation
   - Worksheet total vs BAS 7D and 7C
   - Variance
   - Review notes

7. Evidence index
   - Invoice links
   - Logbook links
   - Telematics reports
   - ATO rate reference

7. Key source index

Topic	Source
FTC definition	ATO - Fuel tax credits for business
Eligibility and registration	Business.gov.au - Register for fuel tax credits
BAS labels 7D and 7C	ATO - How to complete activity statement labels
Adjustments	ATO - Adjusting fuel tax claims
Rates	ATO - Fuel tax credit rates
Calculation tools	ATO - Fuel tax credit tools
Apportionment	ATO - Calculating eligible fuel quantities
Xero BAS treatment	Xero Central - How Xero populates the Activity Statement
Xero-integrated FTC calculator	AccountKit
Fleet telematics FTC	Teletrac Navman, EROAD, Prism, MTData, Smartrak
Market size and policy	Grattan Institute, PBO
Compliance gap	ATO - Fuel tax credits gap

8. Short conclusion

Fuel Tax Credit is not simply a BAS number. It is a calculation based on:

• Fuel purchase evidence
• Eligible business use
• Fuel type
• Litres
• Usage category
• ATO rates
• Apportionment method
• Supporting records

For BAS workpaper automation, the strongest product opportunity is usually not to replace specialist telematics systems. A better approach is to use Xero to identify fuel-related transactions, accept third-party FTC reports or manual worksheets as calculation evidence, and reconcile the final supported FTC amount to BAS labels 7D and 7C.