On 29 March 2022, the Australian Government announced that excise and excise equivalent customs duty rates for petrol, diesel and all other fuel and petroleum-based products (except aviation fuels) will be halved for 6 months. This will apply from 30 March 2022. These changes are not yet law and are subject to royal assent. For more information see Budget 2022-23 – Fuel excise fact sheet
Heavy vehicles on public roads:
Heavy vehicles travelling on public roads have their fuel tax credit reduced by the RUC. This means that not all fuel excise is refunded for heavy vehicles travelling on public roads.
The Government is not changing the existing RUC arrangements for heavy vehicles travelling on public roads, but the temporary reduction in fuel excise will provide a net benefit for heavy vehicle operators of 4.3 cents per litre from 30 March, compared to current settings.
This is because the RUC is currently 26.4 cents per litre of fuel used and, from 30 March 2022, the excise paid by heavy vehicles will be 22.1 cents per litre, which is less than the RUC. The Fuel Tax Credit (FTC) for heavy vehicles on public roads will reduce to nil.
What is a fuel levy (sometimes called a fuel surcharge)? A fuel levy or surcharge is a fee used to accommodate fuel cost fluctuations in freight rates as a very transparent method. A fuel levy (surcharge) allows the freight rate to transparently change upwards or downwards without having to re-address a contract freight rate too often.
How does the fuel levy work? A transport company forwards a quotation to a customer, nominating a base rate, fuel price and what percentage of fuel is required to perform the work in the quoted price. This percentage of fuel cost is used to work out what the increase or decrease (due to fuel price fluctuations) may be to the quoted freight rate and the difference in cost is added (or subtracted) to the base rate as a fee called the Fuel Levy or Fuel Surcharge. The base rate is often linked to an equivalent fuel value of $1.00 per litre and adjusted using the fuel levy with the current fuel price to give today’s rate.
The freight rate is then automatically adjusted against the current fuel price which may be daily, weekly, or monthly depending on the agreement between the transport company and the customer.
The fuel price used will be determined by the transport company and will often be the average of the fuel price over the daily, weekly or monthly period.
NOTE: The fuel levy / surcharge calculator by Freight Metrics does not automatically update costs to reflect current prices. Please discuss the appropriate prices to use with the transport provider.
The figures indicated in the fuel levy calculator are obtained by the following means:
Transport operators using diesel fuel for vehicles over 4.5 tonnes may qualify for the diesel fuel tax rebate under the Australian Tax Fuel Credit scheme.
To work out your Base Rate Fuel Percentage use the Truck Operating Cost Calculator:
Using the pre-set figures in the Truck Operating Cost Calculator – Scroll down to the “Summary of Costs”:
See the Fuel Percentage used (23.4%) – use this figure in the fuel levy calculator as the “Fuel Percentage Used”
(Note this DOES NOT INCLUDE the rebate in your fuel levy calculation.)
Scroll down to the “Results”:
The Charge Rate Per Day in the freight rate cost estimate is used as the base rate figure in the calculator (indicated as $1694.20 if the preset figures in the calculator).
Fuel Levy Calculator:
Having a problem getting the truck cost calculator to correlate with the fuel levy calculator? It is most likely because you included the fuel rebate in the Truck Operating Cost but didn’t in the Fuel Levy Calculator – so deduct the fuel rebate from the “Current Fuel Cost” value in the fuel levy calculator. – see Example 2.
To work out your Base Rate Fuel Percentage use in the Truck Operating Cost Calculator:
Scroll down to the “Summary of Costs”:
See the Fuel percentage used (20.3%) – use this figure in the fuel levy calculator as the “Fuel Percentage Used”
(Note this INCLUDES the rebate in your fuel levy calculation.)
Scroll down to the “Results”:
The Charge Rate Per Day in the freight rate cost estimate is used as the base rate figure in the calculator (indicated as $1628.72 if the preset figures in the calculator are used with the fuel price at $1.00 less the rebate of $0.16500).
Fuel Levy Calculator:
Note: When including the fuel rebate in the Truck Operating Cost Calculator, the base fuel cost and base fuel cost percentage in the fuel levy calculator must also include the rebate if allowed in the calculation. Difference between the examples above is due to a round error in of the fuel cost per liter to 4 decimal places.
Calculation is: [(Current Fuel Cost) – (Base Fuel Cost)] / (Base Fuel Cost) x (Base Rate Fuel Percentage) = Fuel Levy %
Functions of: Base Rate Fuel % = (A), Base Fuel Cost = (B), Current Fuel Cost = (C),
Then: [(C – B) / B] x A = Fuel Levy %
To be eligible for the fuel credit for diesel fuel use in heavy vehicles, the vehicles and vehicle fuel use must satisfy certain environmental criteria. The credit is used for the additional costs of capital and maintenance to meet the environmental criteria including the required reporting and administration. For these reasons, the fuel credit is not generally passed on to the customer.
For more information concerning the fuel credit – see the ATO (Australian Tax Office) website: www.ato.gov.au
Transport companies can and will alter the base rate, fuel base price and percentage of fuel to suit their operating costs. Each company depending on long haul / short haul, fuel buying power, vehicle types, fleet size, distribution and warehousing operations, and staffing will affect both the base rate and percentage of fuel used.
The Fuel levy figures are provided only for continuity with the figures shown in the Truck Operating Cost Calculator trial and do not represent a standardised operating cost. For transport operators / truck owners, consult with your financial advisor before using the preset figures in the fuel levy calculator