How to code a fuel excise duty refund

What is a fuel excise duty refund?

Petrol and LPG carry a tax called fuel excise duty (FED), and farmers are entitled to claim that back for fuel that was used on the farm.

You can claim back up to two years' and then claim quarterly after that. Find out more on the NZTA website.

Businesses can apply for the refund directly, or there are third-party providers, such as PR Claims, that manage the process and charge a fee or commission for the service.

If you use a third-party provider, you will usually receive an invoice that contains:

• the refund amount, and
• an associated fee or commission.

Both the refund and the commission should be recorded as a business income or expense, and GST applies to both. 

How to code the fuel excise duty refund?

First we recommend to create a new extended code (learn more) under the Other farm income category called something like Fuel Excise Duty Refund, with the GST type Business.

How you record the refund and related commission/fee in Farm Focus depends on your reporting preferences.

Option 1: Code the total amount received (simplest method)

Code the total amount received, after any fee or commission is deducted, to the new Fuel Excise Duty Refund code.

This approach keeps your coding simple and maintains accurate reporting.

Note: If the document has been sent through Invoice Scanner then you can use the Merge function to consolidate multiple lines. 

Option 2: Code the fee/commission separately

A second line can be coded if you prefer to split out the fee/commission.

You may want to set up a new code for the commission/fee under Farm Expenditure > Administration, called something like FED Refund Fee/Commission.

When coding the invoice or transaction, code the refund amount to the new Fuel Excise Duty Refund code, and code an additional line to the FED Refund Fee/Commission code.

Note: If the document has been sent through Invoice Scanner then the second line may already be created. 

Farm Focus have teamed up with Petrol Refund Claims New Zealand, where Farm Focus customers receive a special commission rate. For more information and to get in touch with PR Claims click here.