Your fuel tax credit is worked out with a simple formula:
Fuel tax credit = eligible litres × the fuel tax credit rate that applies to that fuel, use and BAS period.
Rates change through the year, so confirm the current rate with the ATO's fuel tax credit calculator or rate tables when you lodge. The harder number is usually the eligible litres, because fuel used on public roads, off public roads and to power auxiliary equipment is treated differently. Working out that split fairly and reasonably is called apportionment. Under the ATO's Practical Compliance Guideline 2016/8, there are three common methods: constructive, deductive and estimated use.
The three apportionment methods at a glance
| Method | How it works | Best when | Evidence it needs |
|---|---|---|---|
| Constructive | Build the claim up from identified eligible fuel use, activity by activity | You have detailed asset and operational data and want high confidence per litre | Asset-level records, activity data, GPS/telematics |
| Deductive | Start with total fuel and subtract the non-claimable portion | Exclusions are easier to identify reliably than every eligible use | Records of excluded use, for example light vehicles on public roads |
| Estimated use | Apply a documented, fair and reasonable percentage from a representative sample | Direct allocation is impractical and a sample reflects normal operations | A defensible sample, clear assumptions, periodic review |
Constructive method
The constructive method builds the claim from the ground up by identifying eligible fuel use directly.
Typical approach:
- Start with fuel acquired and used in the BAS period
- Link fuel use to specific assets, activities, or operating contexts
- Apply the relevant FTC treatment to each identified use category
This method is generally strongest where you have detailed operational data and want high confidence in how each litre is treated.
Deductive method
The deductive method starts with total fuel and removes non-claimable or excluded portions.
Typical approach:
- Start with total fuel acquired for the period
- Deduct fuel amounts that are not claimable
- Claim FTC on the remaining eligible balance
This is often practical where exclusions are easier to identify reliably than every individual eligible use.
Estimated use method
The estimated use method applies a documented, fair and reasonable estimate to determine claimable portions.
Typical approach:
- Use representative operational data or sampling
- Derive an eligible-use percentage (or equivalent factor)
- Apply that percentage to relevant fuel volumes
This method can reduce manual effort where direct allocation is difficult, but it requires clear assumptions, supporting evidence, and periodic review.
How GPS data supports these methods
For methods where the taxpayer must ascertain fuel apportionment, GPS and telematics data can materially improve both evidence quality and workflow efficiency.
GPS-based data can support:
- Constructive method outputs through trip- and asset-level activity classification
- Deductive method outputs by evidencing excluded vs eligible operating contexts
- Estimated use methods by generating defensible apportionment factors from real operating history
In practice, this can lift claim value by reducing over-conservative assumptions and catching eligible use that would otherwise be missed, while cutting manual reconciliation each BAS cycle.
Nuonic is an Australian platform that turns your existing telematics and fuel data into apportionment you can use with any of these methods. It classifies every GPS position as on or off public road, measures auxiliary equipment use, and produces audit-ready figures that trace back to source. Get started, or read how Nuonic calculates FTC with GPS.
Choosing a method
In practice, most teams choose based on:
- Compliance confidence
- Data availability and quality
- Operational effort required each BAS cycle
- Audit traceability
Choosing the right method for your business depends on various factors including the size of your asset base, the complexity of your fuel uses and operations and the tools and data available to you.
Adjustments and reviews
If business use patterns, vehicle mix, or data quality change, review your method and assumptions. FTC calculations should be treated as a controlled process, not a one-off setup.
ATO references
Related
- Fuel tax credit and emissions glossary
- Overview of FTC in Australia
- Record keeping best practices
- ATO references
- How Nuonic calculates FTC using GPS data
This article is general information, not tax advice. Confirm requirements against current ATO publications or with a qualified adviser.