Transport and Logistics Tax Guide

Fuel Tax Credits: On-Road vs Off-Road

Fuel tax credits are the single largest tax concession available to most transport operators. Under the Fuel Tax Act 2006, FTCs are available where taxable fuel (diesel, petrol, some gaseous fuels) is used in machinery, plant, equipment, and heavy vehicles. For road transport, the key eligibility split is between on-road use in heavy vehicles over 4.5 tonnes GVM and off-road use in yards, depots, and loading docks. On-road claims are reduced by the Road User Charge, currently 32.4 cents per litre, which recovers road-wear costs from heavy vehicle operators. Off-road claims receive the full excise rate because no road-wear contribution applies. Fuel powering auxiliary equipment (refrigeration units, PTO hydraulics) qualifies at the off-road rate regardless of whether the vehicle is on a public road at the time. FTCs are claimed on the BAS based on eligible litres multiplied by the relevant rate, with apportionment required between business and private use, on-road and off-road use, and eligible and ineligible activities.

Heavy Vehicle Registration and NHVR Charges

The National Heavy Vehicle Regulator (NHVR) oversees vehicles over 4.5 tonnes GVM under the Heavy Vehicle National Law. Western Australia and the Northern Territory operate outside the HVNL but apply similar charge structures. Registration fees comprise a fixed component plus a variable component reflecting vehicle type (prime mover, rigid, trailer, bus), axle configuration, and mass. Nationally agreed charges have been increasing at 6% annually from 2023-24 through 2025-26, with another 6% increase signalled for 2026-27. The charges are split between state registration fees and the fuel-based Road User Charge. Registration fees are deductible business expenses in the year paid. For operators running multiple trucks and trailers, the cumulative increase in registration costs over recent years is material and should be factored into contract pricing.

Vehicle Depreciation and Asset Finance

Trucks and prime movers carry an ATO effective life of around 15 years for tax depreciation purposes. Trailers, tankers, dollies, and specialised bodies have their own effective lives under the ATO's annual Effective Life Determination. Operators choose between the prime cost (straight-line) method and the diminishing value method, claiming depreciation on the business-use proportion only. Where a vehicle is financed through a chattel mortgage or loan, the operator claims depreciation on the asset plus interest deductions, and can claim GST credits upfront on the full purchase price. Under a lease or rental arrangement, the deductible amount is the lease payment over time, with the lessor retaining ownership and depreciation. The decision between buying and leasing depends on cash flow, residual risk, usage intensity, and exit strategy. Individual assets under $20,000 qualify for the instant asset write-off (made permanent from 2026-27), though this is more relevant for smaller equipment than prime movers.

Owner-Driver Deductions and Logbook Requirements

Owner-drivers who use a vehicle for both business and private purposes must establish the business-use percentage through a logbook or trip records. Key data points include the date, start and finish odometer readings, route taken, purpose of the trip, and kilometres travelled. A 12-week representative logbook can be applied for a longer period provided usage patterns remain consistent. For owner-drivers earning transport income, deductible expenses include fuel (net of FTCs), registration, insurance, tyres, repairs and maintenance, finance costs, and depreciation, all apportioned to the business-use percentage. The cents-per-km method (88 cents per kilometre for up to 5,000 business kilometres in 2025-26) is available but rarely appropriate for full-time owner-drivers who exceed 5,000 business kilometres within weeks. The logbook method, using actual costs multiplied by the established business-use percentage, almost always produces a larger deduction for transport operators.

Chain of Responsibility (CoR) and Compliance Costs

Under the Heavy Vehicle National Law, legal obligations for transport safety extend beyond the driver to every party in the supply chain: consignors, consignees, schedulers, packers, loaders, operators, and employers. Each party has a primary duty to ensure, so far as reasonably practicable, that their transport activities are safe and do not cause or encourage breaches in speed, fatigue management, mass and dimension limits, load restraint, and vehicle standards. Penalties for serious breaches include large fines and possible imprisonment for individuals. The compliance costs associated with CoR (fatigue management systems, mass monitoring equipment, load restraint training, vehicle maintenance programs) are deductible business expenses under s 8-1 ITAA 1997. Electronic work diaries (EWDs), telematics hardware, and fleet management software acquired to meet CoR obligations qualify for the instant asset write-off where each item costs less than $20,000, or for depreciation over their effective life.

GST on Domestic and Export Freight

Domestic freight services (linehaul, courier, local cartage) are taxable supplies at 10% GST where the operator is registered and above the $75,000 turnover threshold. Export freight and international transport connected with export are GST-free, meaning no GST is charged to the client but the operator can still claim input tax credits on fuel, operating costs, and other taxable inputs related to the export service. This effective zero-rating makes export freight more cash-flow efficient than domestic work on a per-dollar basis. Operators with a mix of domestic and export freight must apportion input tax credits between taxable and GST-free supplies. Road tolls incurred for business purposes attract input tax credits where GST is charged on the toll invoice.

Sole Trader vs Company for Transport Operators

A sole trader owner-driver has the simplest setup: low compliance costs, profits taxed at marginal rates, and personal ownership of the vehicle. The downside is unlimited personal liability, which is significant in transport where vehicle accidents, cargo damage claims, and CoR penalties can be substantial. A Pty Ltd company provides a separate legal entity with limited liability, access to the 25% base rate entity company tax rate on retained profits, and clearer asset separation between the business and personal wealth. The trade-off is complexity: director duties, superannuation obligations for any employees, PAYG withholding, more formal record-keeping, and ASIC annual review fees. For owner-drivers running a single truck, the liability protection alone often justifies the company structure. For operators scaling to multiple vehicles and subcontracted drivers, the company structure becomes essential for separating operational risk from personal assets.

Statute references

• Fuel Tax Act 2006 (fuel tax credits framework, on-road vs off-road rates, environmental criteria)
• Heavy Vehicle National Law (NHVR framework, chain of responsibility duties, registration charges)
• ITAA 1997 s 8-1 (general deduction provision for business expenses)
• ITAA 1997 Division 40 (depreciation of trucks, trailers, and equipment)
• A New Tax System (Goods and Services Tax) Act 1999 (GST on domestic and export freight)
• ATO Fuel Tax Credit Rates (current rates by fuel type and period)
• ATO Effective Life Determination (depreciation lives for heavy vehicles and equipment)
• National Transport Commission (RUC and charge consultations)

Frequently asked questions