Why your grocery shop is set to get MORE expensive as truckies deal with the cut in petrol tax
Australian consumers are set to pay more for food despite a six-month halving in the fuel excise because of a transport tax shock.
Petrol prices across Australia have again climbed above $2 a litre despite the tax relief passed in the last Federal budget by former treasurer Josh Frydenberg.
Trucking companies, already battling high fuel prices, are now getting another unpleasant shock as they submit their business activity statement for the June quarter.
Before petrol and diesel excise was halved, transport and grocery firms could claim a fuel tax credit but now they can’t do this – even though fuel prices have surged again.
Chartered accountant Tamara Burns, the director of PB Taxation Services at Port Macquarie on the NSW mid-north coast, said this was likely to be passed on to consumers buying food.
‘For those that can influence their prices, then we’re absolutely going to see an increase in the end product whether it be food or disposable goods,’ she told Daily Mail Australia.
Australian consumers are set to be pay more for food despite six-month halving in the fuel excise because of a small business tax shock (pictured is a chilli vendor at Sydney’s Paddy’s Markets)
The halving of the fuel excise on March 30 also means businesses won’t be able to claim a fuel tax credit in their quarterly business activity statements covering trade until September 28.
How the halving of fuel exercise is hurting business
On March 30, fuel excise was halved to 22.1 cents a litre
This meant the fuel tax credit companies could claim in their quarterly business activity statement fell to zero
The Australian Taxation Office said that from March 30 to September 28, 2022, the fuel tax credit rate ‘will be 0c per litre’ because ‘the road user charge exceeds the excise duty paid, reducing the fuel tax credit rate to nil’
Before excise was halved from 44.2 cents a litre, the fuel tax credit was 17.8 cents a litre
The June quarter business tax returns are usually submitted in July.
Ms Burns said the unavailability of the fuel tax credit was likely to hit small businesses, especially transport operators, already struggling with higher fuel prices.
‘It’s really essentially been a double whammy – prices of fuel have gone up and their ability to receive a refund has disappeared,’ she said.
Many long-haul single trucking operators typically use 20,000 litres of petrol a quarter which previously entitled to them to a $3,560 tax credit.
This typical $3,560 fuel tax credit won’t be able to be claimed for the June or September quarters, against the GST that companies had already paid, when firms submit their quarterly business activity statements.
‘For small businesses, they’re missing out on a refund that would have provided them a little bit of a buffer on fuel prices,’ Ms Burns said.
‘For trucking businesses that have more than one driver, which would be a lot of businesses, the impact of the disappearance of the fuel tax credit is going to be much more significant for them.’
Ms Burns said truck drivers, who negotiated transport delivery deals before the fuel excise was halved in March, would be hit particularly affected.
Trucking companies, already battling high fuel prices, are now getting another unpleasant shock as they submit their business activity statement for the June quarter. Before petrol and diesel was halved, transport firms could claim a fuel tax credit but now they can’t do this – even though fuel prices have surged again (pictured is a road train in outback Australia)
‘Many truck drivers are actually in fixed contracts so regardless of fuel prices, they just have to absorb any ups and downs,’ she said.
Chartered accountant Tamara Burns, the director of PB Taxation Services at Port Macquarie on the NSW mid-north coast, said this was likely to be passed on to consumers buying food
‘For those ones, they’re going to find the next six and 12 months very difficult because they’re locked into contracts that were negotiated when the fuel tax credit still existed.’
The former Coalition government’s March 29 budget temporarily halved the fuel excise to 22.1 cents a litre, from 44.2 cents a litre, costing $2.7billion in foregone revenue.
The disappearance of the fuel tax credit coincided with the March 30 debut of the fuel excise halving, which meant it only affected business balance sheets for two days of their March quarter business activity statement.
‘It wouldn’t have been noticed by most businesses and they’re just going to start realising now as they prepare their June quarter BAS,’ Ms Burns said.
Despite that, average unleaded prices have surged back above $2 a litre as Russia’s Ukraine invasion curbs the global supply of crude oil.
The halving of the fuel excise on March 30 also means businesses won’t be able to claim a fuel tax credit in their quarterly business activity statements covering trade until September 28 (pictured is a Sydney service station)
The fine print on the Australian Taxation Office website also notes the fuel tax credit from March 30 to September 28, 2022 will be reduced to zero cents a litre.
‘This is because the road user charge exceeds the excise duty paid, reducing the fuel tax credit rate to nil,’ it said.
In February, when the fuel excise was at 44.2 cents a litre, businesses could claim a rebate of 17.8 cents a litre.
In another worrying sign, the monthly Westpac-Melbourne Institute index of consumer sentiment for July dived by three per cent to 83.8 points, down from 86.4 points in June.
A score below 100 indicates pessimists outnumber optimists, based on a survey of 1,200 people, and the reading has fallen for seven straight months, with inflation in the year to March surging by 5.1 per cent.
Westpac chief economist Bill Evans said consumer gloom was at levels seen during the 2008 Global Financial Crisis, the 1991 recession and the recession of the early 1980s.
‘Without doubt consumers are still very sensitive to the inflation pressures on their budgets but it appears their anxiety around interest rates is increasing,’ he said.
The Reserve Bank of Australia raised interest rate in May, June and July and more pain for borrowers is expected in August.