Construction and Trades: A simple FTC + BAS workflow for Fuel, Tools, Hire and Travel

If you run a trade or construction business, you deal with fuel, hired gear, tool purchases and plenty of travel. Get those moving parts into a clean workflow and your BAS becomes quick, accurate and cash-flow friendly. This guide shows you how to set up a month-to-month process that captures fuel tax credits, claims the right GST, and keeps the ATO happy.

Why this workflow matters

Fuel is a major cost for trades and construction. The fuel tax credit (FTC) system lets eligible businesses claim a credit for the excise included in fuel. Rates change twice a year in February and August, so leaving claims to the last minute risks missed savings. You also want the GST coded correctly on tools, materials, hire invoices and travel costs so your BAS shows the right net position every quarter or month. The ATO provides clear rules on eligibility, rates and BAS labels, and getting these steps right helps you avoid adjustments or penalties.

The end-to-end workflow at a glance

1. Collect the right records weekly.
   Fuel receipts with litres and ABN, hire invoices, tool purchases, accommodation and travel receipts, toll statements, and any employee reimbursements with tax invoices attached.
2. Code expenses correctly in your software.
   Split fuel by use type, map FTC-eligible litres, set GST codes for tools, hire, travel and reimbursements, and mark private portions.
3. Calculate FTC each period.
   Use current ATO rates for the period and activity type, apply August and February rate changes, and keep a worksheet for litres and apportionment.
4. Prepare BAS.
   Claim FTC at label 7D, put any decreasing adjustments at 7C, report GST collected and GST credits, then lodge by the due date or your agent concession date.
5. Review and improve.
   Reconcile litres, check logs, fix miscoding, and store evidence securely.

For a fuller look at what a bookkeeper should cover each cycle, see Flexible Financial Solutions’ piece on what your bookkeeper should actually be doing and their DIY bookkeeping for tradies guide. These are practical reads for owners who want clean books and stress-free lodgements.

• What should your bookkeeper actually be doing for your business?
• DIY bookkeeping for tradies: what you can handle and when to hire help
• Finance and bookkeeping blog hub

Step 1: Collect the right source documents

Fuel

Keep all receipts and statements that show litres. For site equipment and generators, litres are usually FTC-eligible. For heavy vehicles on public roads, FTC may be reduced by the road user charge and can be nil for travel on public roads, so separate travel from off-road idling, on-site use or auxiliary equipment where possible. The ATO confirms that FTC eligibility depends on the activity and that rates are indexed twice a year. 

Helpful records:

• Fuel receipts with date, litres, supplier ABN and amount
• Plant hire delivery dockets showing on-site use
• Vehicle or plant logs that help you apportion travel vs on-site activities
  

Tools and materials

Store tax invoices for tools, consumables and materials. If the invoice shows GST, you can usually claim the credit in your BAS for the period you received the invoice.

Hire and equipment

Hire invoices should state GST and the equipment hired. Keep site diaries or job schedules that tie the hire to business use. If your staff pay a bond or fee that you later reimburse, treat it as an employee reimbursement with the tax invoice attached.

Travel

You can claim deductions for business travel, but you must exclude private components. Keep tax invoices for accommodation, transport, fuel, parking and tolls. The ATO requires records that prove the travel was for business. 

Employee reimbursements

If you reimburse an employee for a taxable expense that relates to your business and they give you a valid tax invoice, you can claim the GST credit in your BAS. Put a simple policy in place so staff attach the invoice to the reimbursement. 

Step 2: Code expenses correctly in your accounting software

Create clear expense categories

Use separate accounts or tracking categories for:

• Fuel for heavy vehicles on public roads
• Fuel for off-road plant and equipment
• Fuel for generators and other stationary equipment
• Hire and equipment rental
• Tools and small equipment purchases
• Staff travel and accommodation
• Employee reimbursements

This helps you apply the right FTC rate and GST code later. It also speeds up your BAS review because the totals line up with your worksheet categories.

GST coding

• Tools, materials and hire from GST-registered suppliers: GST on expenses.
• Employee reimbursements with valid tax invoices: GST on expenses once reimbursed.
• Travel costs: code GST based on the invoice. Split private parts as no GST and non-deductible if needed. 

Step 3: Calculate your fuel tax credits

Know your uses and rates

Rates vary by activity. Examples for trades and construction:

• On-site plant and equipment such as skid steers, excavators and compressors: generally FTC-eligible.
• Stationary equipment such as diesel generators: generally FTC-eligible.
• Heavy vehicles on public roads: FTC reduced by the road user charge and may be nil.
• Light vehicles on public roads: not eligible. The ATO’s eligibility page makes this distinction clear. 

The ATO confirms that FTC rates are indexed each February and August. Always use the rate that applies to the fuel used during that part of the BAS period. If a rate changes mid-period, split litres before and after the change. 

Practical method for monthly or quarterly BAS

• • Build a simple spreadsheet with rows for each activity: on-site plant, generators, heavy vehicles on public roads, light vehicles on private roads.
  • Enter litres for each category. Where you only have dollar amounts, convert using the price per litre on the receipt or card statement.
  • Apply the correct rate for the activity and period.

• Keep the worksheet with your BAS working papers and update it each period.
  

If you discover missed litres from earlier periods, you can generally claim within four years from the due date of the earliest BAS in which you could have claimed. Do not wait until an audit to fix this. 

Step 4: Prepare and lodge your BAS

On the BAS:

• Put your FTC amount at label 7D, including any increasing adjustments.
• If you have a decreasing adjustment, put it at label 7C.
• Report your GST collected and GST credits in the usual labels. Australian Taxation Office

If you work with a registered BAS agent, you may get concessional lodgment dates for quarterly BAS. Plan cash flow and paperwork around those dates rather than the standard deadlines. 

Step 5: Common traps and how to avoid them

1) Treating all fuel the same

Fuel in a heavy vehicle on public roads is different from fuel in a generator or excavator. Track litres by use type. Build habits on site: photograph pumps and meters, ask suppliers for invoices that show litres, and keep simple logs. The ATO’s eligibility guidance shows how activity type drives your claim. 

2) Missing February and August rate changes

If your BAS period straddles a change, split the litres. Rates are indexed in line with CPI each February and August. Using a single average rate can under-claim or over-claim. 

3) No evidence for travel

Travel deductions and GST credits need records that show the business purpose. Keep itineraries, job numbers and diary notes. Do not claim private components. 

4) Reimbursements without tax invoices

You can only claim the GST on employee reimbursements if you hold a valid tax invoice. Make it policy that staff attach the invoice to every reimbursement claim. 

5) Leaving old FTC claims on the table

There is a four-year time limit. Review the last few years now and fix gaps while you still can. 

How to handle fuel, tools, hire and travel in practice

Fuel

• Pay with one fuel card per vehicle or plant where possible.
• Reconcile litres monthly against job activity.
• Keep a basic log that shows how much time a vehicle or plant spends travelling on public roads versus on site.
• For generators and stationary equipment, keep delivery slips and site diaries that tie the fuel to the job.

Tools and small equipment

• • Store tax invoices in your accounting system with job or cost centre tags.
  • Use a consistent GST code.

• Review asset thresholds with your adviser to decide when to capitalise a purchase.

Hire and equipment rental

• • Ensure hire invoices show GST and the equipment details.
  • Attach delivery and pick-up notes.
    

• If staff pay deposits or fees and you reimburse them, treat it as an employee reimbursement with the tax invoice attached.

Travel and accommodation

• • Keep receipts for accommodation, flights, car hire, parking and tolls.
  • Split private portions.

• Link travel to job numbers or quotes in your system. The ATO expects evidence that the travel relates to the business. 

For real-world bookkeeping tips on handling these costs, Flexible Financial Solutions’ DIY bookkeeping for tradies article has simple, time-saving ideas for capturing receipts and keeping categories tight. Link above.

Build a monthly close that supports your BAS

1. Lock the month in your accounting software after posting all fuel, hire, tools and travel.
2. Run the FTC worksheet, update litres and rates, and reconcile to fuel expense.
3. Scan for anomalies like negative GST, suppliers with no ABN, or fuel spend with no litres.
4. Check reimbursements and ensure invoices are attached.
5. Save your working papers: FTC worksheet, rate tables, logs and key invoices.
6. Prepare the BAS and lodge by the due date. If you use a BAS agent, follow their checklists and cut-offs. 

For what that monthly cadence looks like with a professional on your side, see Flexible Financial Solutions’ post on what your bookkeeper should actually be doing.

FAQs

Are light vehicles eligible for FTC?

Not on public roads. Light vehicles may be eligible on private roads or off public roads. Keep clear evidence of where they were used. 

What if we missed a claim last year?

You can generally claim within four years from the due date of the earliest BAS in which you could have claimed. Act now to avoid timing out. 

Where do I report FTC on the BAS?

Label 7D for the FTC amount and increasing adjustments. Use label 7C if you have a decreasing adjustment. 

Do we get extra time to lodge if we use a BAS agent?

Many businesses do. Your agent can access the ATO’s lodgment program dates. 

Ready to make this easy?

If you want clean books, full FTC claims and a BAS that goes in on time, Flexible Financial Solutions is here to help. We set up simple capture systems for fuel, hire, tools and travel. We map your software so GST and FTC are coded right the first time. We handle your BAS lodgement and keep you up to date when rates change.

Book a chat today and let’s put a straightforward workflow in place that saves tax, saves time and gives you clarity every month. You can also explore more practical reads on our finance and bookkeeping blog, including guides for tradies and owners who want stress-free compliance.