Fuel Tax (Road User Charge) Determination 2023

The determination directly affects any entity that claims a fuel tax credit under the Fuel Tax Act 2006 and that uses taxable fuel in a vehicle on a public road. This includes a broad cross‑section of Australian businesses. Transport operators running trucks, buses, couriers, and delivery fleets are the most obvious group. Their fuel tax credit is reduced by the road user charge, so each increase in the per‑litre rate raises their net operating cost. Businesses that operate both on‑road and off‑road vehicles, such as farms, mines, and construction companies, are affected in a more complex way: they can still claim the full credit for fuel used off‑road (in tractors, generators, or earthmovers) but must apply the reduction for fuel used in on‑road trucks, utes, and other registrable vehicles. This creates a record‑keeping burden to separate fuel use between the two categories. The determination also affects fuel suppliers indirectly, because their customers’ net credit positions influence purchasing decisions and overall demand. However, the instrument does not directly impose obligations on fuel retailers or wholesalers. The forward‑looking rate schedule allows businesses to budget for higher fuel tax credit reductions in the 2024‑25 and 2025‑26 financial years. For a large fleet consuming hundreds of thousands of litres annually, the difference between the 2023‑24 rate of $0.288 and the 2025‑26 rate of $0.324 per litre represents a material increase in annual cost. Entities using gaseous fuels, such as natural gas‑powered trucks, face a proportionally higher per‑kilogram charge, though the fuel itself may be cheaper. The determination does not affect individual motorists who do not claim fuel tax credits, because the road user charge only applies within the business fuel tax credit system. Nevertheless, the increased charge may be passed through to consumers in the form of higher freight costs. The instrument also affects state and territory governments that operate fleets and claim fuel tax credits, as well as non‑profit organisations and local councils that use heavy vehicles. Any entity that incorrectly fails to apply the road user charge when claiming a credit risks an ATO adjustment and potential penalties, so the determination has a compliance impact across the entire fuel tax credit population.

This determination itself is a rate‑setting instrument and does not create new duties or rights beyond those already established in the Fuel Tax Act 2006. However, by prescribing the numerical rate, it crystallises the duty of an entity claiming a fuel tax credit to reduce that credit by the correct amount. Under section 43‑10 of the Fuel Tax Act, the amount of the fuel tax credit for fuel used in a vehicle on a public road is the notional credit amount minus the "authorised amount", which is the rate set out in this determination multiplied by the number of litres or kilograms of fuel used. The duty lies in calculating that subtraction accurately and reflecting it in the business activity statement or fuel tax credit return. The right that flows from the determination is the ability to claim a reduced credit that is legally correct: an entity that applies the correct rate can be confident that its claim is compliant. The determination also creates a right to rely on the forward rates for planning purposes, because the instrument gives three‑year visibility. However, because the rate for the period beginning 1 July 2025 is set as a single amount with no expiry, any future determination could alter it earlier, so that right is not absolute. The determination does not confer any private right of action or any entitlement to a refund if the rate is later found to be invalid, though judicial review is theoretically available. Entities also have the right to challenge the determination through administrative review if they have standing, though the instrument is a legislative instrument rather than a reviewable decision. Practically, the key duty is to maintain records that demonstrate how the road user charge was applied: separate fuel acquisitions for on‑road and off‑road use, odometer readings, and vehicle classifications. Without those records, a business cannot prove it applied the correct rate. The determination imposes no obligations on individuals who are not fuel tax credit claimants. It also does not affect the rights of taxpayers under the Taxation Administration Act 1953 regarding objections and appeals; those rights remain intact. The determination essentially quantifies one variable in a statutory formula, so the rights and duties are derivative of the parent Act.

The determination does not create penalty provisions. The Fuel Tax Act 2006 and the Taxation Administration Act 1953 contain the enforcement mechanisms. An entity that claims a fuel tax credit that is too large because it failed to apply the correct road user charge rate may be liable for under‑reported tax. The ATO can assess a shortfall amount, impose the general interest charge, and apply administrative penalties under the taxation law framework. The penalty rate depends on whether the entity took reasonable care. If the entity simply ignored the increase in the road user charge from $0.288 to $0.305 on 1 July 2024, that would likely be treated as a failure to take reasonable care, attracting a penalty of 25% of the shortfall amount. Intentional disregard could attract a penalty of 75%. The ATO enforces the determination by reviewing fuel tax credit claims, conducting audits, and issuing amended assessments. The instrument itself is a legislative instrument registered on the Federal Register of Legislation, so it is legally binding. The ATO can also require an entity to produce records that demonstrate how it calculated the road user charge component. Because the determination provides a clear table of rates, there is little ambiguity about the correct figure; disputes will centre on whether the fuel was actually used on a public road or on the quantity of fuel used. The penalty for false or misleading statements, even if made without intent, can be significant. The Commissioner of Taxation also has powers to remit penalties in certain circumstances, but the determination’s clarity makes it difficult to argue ignorance. Criminal penalties do not apply under this instrument, but the Tax Administration Act provisions for deliberate evasion could apply if a taxpayer deliberately conceals on‑road use. The determination effectively raises the stakes for compliance because the rate is higher than previous determinations, so the cost of error increases proportionally.

The determination operates exclusively under the Fuel Tax Act 2006, specifically subsection 43‑10(8), which empowers the Minister to determine the rate of road user charge by legislative instrument. It does not directly interact with the Excise Act 1901 or the Customs Act 1901, though those Acts impose the duty on fuel that the fuel tax credit offsets. The road user charge is a clawback of that credit, so it indirectly interacts with the duty rate: if the duty rate rises, the fuel tax credit increases, and the road user charge then reduces the net benefit for on‑road users. The determination does not interact with state road‑user charges or registration fees, which are separate imposts imposed by state governments on vehicle owners. There is no credit or offset between the Commonwealth road user charge and state‑level charges such as registration or mass‑distance levies. The determination also interacts with the Diesel Fuel Rebate Scheme, which has now been absorbed into the fuel tax credit system; off‑road users such as miners and farmers receive the full credit without reduction, so the determination only applies to the portion of their fuel used on public roads. The instrument does not affect the operation of the Fuel Tax (Credits) Regulations or any other legislative instruments under the Fuel Tax Act. If a business also claims a carbon credit or a grant under another program, the road user charge is calculated separately. The determination does not interact with the Competition and Consumer Act 2010 or with any state franchising legislation. For businesses that use gaseous fuels, the determination interacts with the Excise Tariff Act 1921, which sets the duty rate per kilogram for LPG and natural gas; the road user charge for gaseous fuels is expressed per kilogram, so the calculation is straightforward. The determination’s forward schedule interacts with the annual budget cycle and with the government’s broader infrastructure funding policies, though this is a policy rather than a legal interaction. The instrument revokes all previous determinations, meaning any prior reading of the road user charge under earlier instruments ceases to have effect from 1 July 2023. This interaction ensures that only one set of rates applies at any time.

The instrument recites at clause (1): “I revoke all previous determinations of the rate of road user charge.” This means that any earlier determination made under subsection 43‑10(8) of the Fuel Tax Act 2006 is completely superseded. The instrument does not name the previous determinations, but it is standard practice for the Minister to issue a new determination each year or biennially as fuel tax policy changes. The determination was made on 19 April 2023 by the Minister Catherine King and commences on 1 July 2023. Because it revokes all previous determinations, any rates that applied before 1 July 2023 (for example, a rate of say $0.262 per litre for liquid fuels in a prior instrument) no longer have legal effect. The instrument does not include any transitional provisions; it simply applies from the commencement date. There is no amendment history within the instrument itself because it is a fresh determination rather than an amending instrument. Future amendments will be made by a later determination that will, in turn, revoke this one. The instrument’s lifespan is indefinite until superseded, but the rate for the third period (beginning 1 July 2025) is set, so any change before that date would require an earlier revocation. There is no statutory indexation formula, so the rates are set by ministerial discretion at the time of making. The determination was registered on the Federal Register of Legislation and is subject to tabling and disallowance by either House of Parliament, which is a standard feature of legislative instruments under the Legislation Act 2003. No disallowance motions were recorded in relation to this instrument. The revocation of all previous determinations means that any rate history is technically wiped; practitioners must rely on the current instrument alone.

This specific determination has not been the subject of any reported litigation. The instrument is a legislative instrument and could theoretically be challenged on grounds such as unreasonableness, failure to consider relevant matters, or procedural error in its making. However, no court or tribunal has published a decision involving this determination. The road user charge regime itself has been indirectly considered in cases concerning fuel tax credits, for example in administrative appeals tribunals and Federal Court decisions about what constitutes use on a public road, but those cases turned on the factual question of road use rather than the validity of the rate. The determination is essentially a ministerial exercise of a delegated power with clear statutory authority, so litigation on the rate alone would be difficult to sustain unless the Minister acted beyond power, which is highly unlikely given the specificity of subsection 43‑10(8). There is no evidence taxpayers have sought to challenge the quantum of the $0.288, $0.305, or $0.324 per litre rates. The lack of litigation history does not mean the determination is immune from challenge, but it suggests that the legal community accepts the rates as within the Minister’s discretion. If a future rate were set outside the normal indexation pattern or without adequate reasoning, a constitutional challenge under the principle of no taxation without parliamentary authorisation could be attempted, but the Fuel Tax Act provides sufficient authority. The determination enjoys the benefit of being a disallowable instrument, which provides a political rather than judicial check.

Several aspects of the determination can catch practitioners off guard. First, the rate for the third period uses the phrase “beginning on 1 July 2025” without an end date. That means the rate of $0.324 per litre (liquid) and $0.432 per kilogram (gaseous) continues indefinitely until a later determination revokes or amends it. Anyone reading only the table could assume there is a sunset after 2025, but there is not. Second, the gaseous fuel rates appear higher on a per‑kilogram basis than the liquid fuel rates on a per‑litre basis, but they are not directly comparable because a kilogram of LPG occupies about 1.95 litres at standard temperature and pressure. Converting the gaseous rate to an equivalent per‑litre rate yields about $0.221 per litre for the first period, which is actually lower than the liquid rate of $0.288. This nuance is often missed, leading to incorrect calculations when companies maintain records in litres rather than kilograms. Third, the determination revokes all previous determinations, which means any transitional claims straddling two periods must be careful to apply the correct rate for each portion of fuel acquired or used. The Fuel Tax Act rules on timing of acquisition versus use may interact; if fuel is acquired before 1 July 2023 but used after, the rate at acquisition may still apply, depending on the credit entitlement rules. Fourth, the instrument does not contain any notes or examples , it is a stark table of rates. This lack of guidance increases the compliance burden because businesses must cross‑reference the Fuel Tax Act to determine how to apply the rate. Fifth, the determination applies to “taxable fuels for which duty is payable at a rate per litre of fuel (liquid fuels)” , but not all liquid fuels are subject to duty per litre; some biofuels or blended fuels may have different duty bases. The rate may not cover all taxable fuels. Sixth, the determination is made by the Infrastructure Minister rather than the Treasurer, which may surprise those used to tax‑related instruments; the power is specifically vested in that portfolio. Seventh, the rate increases are pre‑determined for three years, but there is no legislative guarantee that the government will not make a new determination that changes the rate earlier; businesses relying on the forward schedule for long‑term contracts face political risk. Eighth, the instrument does not distinguish between vehicle weight, road type (urban versus rural), or number of axles , it is a flat per‑litre charge, so a light van pays the same rate per litre as a fully laden B‑double, even though the heavier vehicle causes far more road damage. This inherent cross‑subsidy is a policy gotcha, not a legal one, but it affects cost allocation within fleets.

Compliance with the determination requires entities that claim fuel tax credits to apply the correct road user charge rate when calculating the net credit for fuel used in vehicles on public roads. The first step is to identify the period in which the fuel was acquired or used, depending on the entity’s accounting method. For an entity using the accruals basis, the rate applicable at the time of acquiring the fuel will generally apply. For cash basis entities, the rate at the time of use may be relevant. The tables in the determination must be consulted for the appropriate financial year. For example, from 1 July 2024 to 30 June 2025, the liquid fuel rate is $0.305 per litre; any fuel used in that year should attract that rate. The gaseous fuel rate for the same period is $0.408 per kilogram. It is essential to maintain accurate records of fuel purchases and usage separated by fuel type (liquid or gaseous) and by road use (on‑road versus off‑road). For a mixed fleet, logs or trip data are necessary to apportion fuel between the two categories. Each business activity statement or fuel tax credit return must include the correct subtraction. The ATO provides online calculators and guidance, but the determination itself is the primary legal source. Entities should also monitor any subsequent determinations that may revoke this one, because the third period rate is open‑ended and could be changed before 1 July 2025. For large operators, it may be prudent to implement software that automatically updates the charge rate based on the effective date. The road user charge is not deductible as a separate expense; it simply reduces the credit amount. In practical terms, the entity calculates the gross fuel tax credit (the full credit without reduction) and then subtracts the product of the number of litres or kilograms of fuel used on public roads multiplied by the relevant rate from the determination. The resulting figure is the net credit claimed. Documentation should include the calculation basis and the source of the rate. If an entity employs external accountants or tax agents, they must be instructed about which determination applies. For entities that use both liquid and gaseous fuels, separate calculations are required. Failure to comply results in an over‑claimed credit, which the ATO will recover with penalties and interest. The best compliance practice is to keep a copy of the current determination on file and to review the rate at the start of each financial year.