Fuel excise relief: Short‑term savings, longer‑term business decisions

Is the fuel excise cut real relief for businesses, or just a brief pause in pressure? For many businesses, the real value lies not in the saving itself, but in how well they plan for what comes next.

The Australian Government has announced a temporary reduction to fuel taxes aimed at easing cost pressures for households and businesses, particularly those reliant on transport and logistics. The measures form part of a broader fuel security response and will apply for a three‑month period from 1 April 2026 to 30 June 2026, subject to further government announcements.

For many businesses, especially those operating in regional areas or with heavy vehicle usage, these changes will have direct implications for fuel costs, fuel tax credits (FTCs) and compliance processes.

Key changes at a glance

From 1 April 2026, the Government will implement the following temporary measures:

• Fuel excise halved on petrol and diesel, reduced from 52.6 cents per litre to 26.3 cents per litre
• Heavy Vehicle Road User Charge (RUC) reduced to zero (down from 32.4 cents per litre)
• Measures to remain in effect until 30 June 2026

While excise obligations fall on fuel manufacturers and importers, the expectation is that the reduction will be passed through the supply chain, resulting in lower prices at the bowser for businesses and consumers alike.

What this means for fuel tax credits

The changes also have a direct flow‑on effect for businesses that claim fuel tax credits, particularly those operating heavy vehicles on public roads.

As a result of the excise reduction:

• The “full” fuel tax credit rate will reduce from 52.6 cents per litre to 26.3 cents per litre for fuel acquired on or after 1 April 2026
• With the road user charge reduced to zero, businesses using heavy vehicles on public roads should also be entitled to an FTC rate of 26.3 cents per litre during the temporary period

For many road transport and logistics businesses, this creates a simpler environment, removing the need to calculate different FTC rates for fuel used in heavy vehicles on public roads during the three‑month window.

Transitional and compliance considerations

While the measures provide welcome relief, they also introduce transitional complexity for businesses, particularly around the timing of fuel acquisition.

Fuel tax credit entitlements are determined by when fuel is acquired, imported or entered for home consumption, not when it is actually used. This distinction is especially important for businesses that:

• Purchase fuel in bulk
• Operate on‑site fuel storage or bowsers
• Have fuel acquired before 1 April 2026 but used after that date

Care will be required to ensure:

• The correct FTC rate is applied to each fuel purchase
• Fuel acquired before and after 1 April 2026 is appropriately identified and recorded
• Claims remain consistent with ATO requirements during and after the temporary measures

Regional and transport businesses: practical impacts

For regional businesses, fuel costs often represent a significant operating expense; whether through freight, agriculture, construction or service delivery across large distances.

Megan Mann at PKF New England North West (Tamworth), notes that while the reduction will help ease short‑term cash flow pressure, businesses should avoid viewing it as a permanent cost reset.

From a business advisory perspective, Megan emphasises the importance of:

• Treating the excise cut as temporary relief, not a long‑term pricing assumption
• Reviewing fuel budgets and forecasts beyond 30 June 2026
• Ensuring accounting systems can handle rate changes cleanly, particularly where fuel storage is involved

For transport‑heavy businesses, the temporary removal of the road user charge may also reduce administrative burden, but systems and processes will need to revert once the measure expires.

What businesses should do now

To stay compliant and make the most of the changes, businesses should consider:

1. Reviewing fuel acquisition dates: Ensure fuel purchases around 1 April 2026 are clearly documented to support correct FTC claims.
2. Updating internal systems and processes: Accounting and fuel management systems may need short‑term adjustments to reflect the revised rates.
3. Monitoring cash flow impacts: While fuel costs may fall, the impact will vary depending on contractual arrangements, pricing structures and timing of purchases.
4. Planning for the end of the measure: With the reductions currently scheduled to end on 30 June 2026, businesses should be prepared for rates to revert unless extended.

How should businesses respond to the temporary fuel excise relief?

Rather than focusing solely on the short‑term saving, Megan and PKF’s business advisory team encourages business owners to use the period as a stress test.

“This is a window to really understand how fuel costs move through your business; where they bite, where they don’t, and how quickly changes show up in cash flow. Businesses that take the time to analyse that now will be far better placed when costs inevitably shift again.”

Her advice is simple: treat the excise cut as information, not just relief. “If you come out of this period with better data, cleaner systems and clearer assumptions, that’s where the real value is, not the cents per litre.”

Note: Separately, the ATO has confirmed that the cents‑per‑kilometre rate used to claim work‑related motor vehicle expenses will remain at 88 cents per kilometre for the 2025–26 income year. While this rate already factors in fuel costs, it operates independently of the fuel excise and fuel tax credit changes announced by the Government.