Fuel Excise Duty Charges: What They Are and How to Claim Them Back

When you purchase fuel for your go-karts, a significant portion of what you pay at the pump includes fuel excise duty (FED), a tax applied to petrol and diesel by the government. Fuel excise duty helps fund the maintenance and construction of roads, but for businesses like karting operators who use vehicles off-road, this cost can be an unnecessary burden. The good news is that you may be eligible to claim a portion of this cost back.

What is Fuel Excise Duty?

Fuel excise duty is a tax included in the price of most types of fuel used on public roads. In New Zealand, for example, this charge is primarily intended to fund road infrastructure. However, karts are used exclusively off-road, meaning you’re paying for something you don’t actually benefit from.

It is estimated that 25% or more of the total amount you pay for kart fuel may be made up of these road-user-related charges, depending on current prices. Given that fuel is one of the more significant operational costs for karting businesses, these charges can add up quickly, affecting profitability.

For example, we have a fuel account and a separate card specifically for our go-karts. This allows us to keep track of exactly how much fuel is being used for the karts and claim back the excise duty portion accordingly.

How Can You Claim Fuel Excise Duty Back?

Fortunately, businesses that use fuel for off-road purposes, such as in go-karts, generators, or other machinery, are eligible to claim a refund on the fuel excise duty portion of their fuel costs.

Here’s how the process typically works:

1. Record Your Fuel Usage: Keep accurate records of the fuel used exclusively for your karts. This includes maintaining receipts, invoices, and logs that show how much fuel was used off-road.

2. Submit a Claim to the Government Agency: In New Zealand, for instance, the New Zealand Transport Agency (NZTA) handles claims for refunds on fuel excise duty. The claim must be submitted periodically, typically quarterly or annually, depending on your fuel usage and the size of your operation.

3. Proof of Off-Road Use: You’ll need to demonstrate that the fuel was used for off-road purposes. This might involve supplying information on your business, such as the type of vehicles or machinery being used and how fuel is consumed in your operations.

4. Receive Your Refund: After processing your claim, the agency will refund the excise duty amount based on the volume of fuel used off-road. In New Zealand, approximately $0.72 per litre of petrol, though the exact amount can vary depending on current rates. (Based on current prices of around $2.40 per litre).

Maximising Your Savings

Given the scale of karting operations, claiming back fuel excise duty can result in significant savings over time. It’s essential to have good systems in place for tracking fuel usage and submitting claims regularly. Many businesses opt to handle this internally, though there are services available to help manage the process if you’re handling large volumes of fuel.

By taking advantage of this refund, karting businesses can reduce operational costs and improve profitability, ensuring that you’re not paying for road-use charges on fuel that’s never going to hit the highway.

Conclusion

Fuel excise duty charges are often a hidden cost for off-road businesses like karting operators. However, with proper records and a little effort, you can claim back a substantial portion of these charges. It’s worth reviewing your fuel consumption and setting up the necessary systems to claim these refunds regularly. Over time, this could amount to significant savings and contribute to the financial health of your karting business.

Let us know if you need any assistance to get started claiming back your first FED refund.

Please note: This article has been posted to make you aware of Fuel Excise Duty Taxes and the ability to be able to claim them back. Prices referred in this article are not exact and are examples only. All prices and percentages may vary.