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The measures include a three-month halving of fuel excise on petrol and diesel, and a temporary reduction of the Road User Charge (RUC) to zero, both effective from 1 April to 30 June 2026. These changes have direct implications for pump pricing and for businesses that claim Fuel Tax Credits (FTC).
The fuel excise embedded in petrol and diesel for the period from 1 April to 30 June 2026 is 20.6 cents per litre, reflecting the temporary halving of the CPI‑indexed excise rate applying during that period.
The outcomes below reflect changes in net fuel cost, taking into account both pump prices and FTC.
Private Individuals
Businesses
Initial commentary has referenced a fuel excise rate of 26.3 cents per litre on the basis of a simple halving of the historical headline excise rate. However, fuel excise is CPI‑indexed, and the temporary halving applies to the CPI‑indexed excise rate in force at the time. On this basis, the operative excise rate during the relief period is 20.6 cents per litre, as reflected in the ATO’s published rates.
From 1 April 2026, for a three month period ending 30 June 2026:
Fuel prices may not adjust immediately at all sites, depending on when retailers receive new fuel stock purchased under the lower excise rate. However, FTC rates will change for all fuel acquired from 1 April 2026, regardless of when retail prices adjust.
FTCs provide a credit for fuel tax included in the price of fuel used in eligible business activities. Rates vary depending on the activity and vehicle type.
There are typically two relevant FTC rates:
The temporary excise reduction and temporary removal of the RUC result in different outcomes across common user groups, as summarised below.
| Category | Bowser price impact (change from pre‑1 April excise position) | FTC claimed in BAS | Overall outcome |
|---|---|---|---|
|
FTC registered, off road and non-road business use |
Reduction in excise at the bowser of 32.0 cpl |
FTC reduces by 32.0 cpl in line with the reduction in excise rate from 52.6 cpl to 20.6 cpl |
No net additional benefit overall, with relief shifting from BAS to bowser |
|
FTC registered, heavy vehicles (greater than 4.5 tonnes GVM) travelling on public roads |
Reduction in excise at the bowser of 32.0 cpl |
FTC increases marginally from 20.2 cpl to 20.6 cpl due to RUC being reduced to zero |
Overall benefit of 32.4 cpl compared to the position prior to 1 April 2026, reflecting the removal of the RUC and fuel excise being fully offset during the relief period. |
|
FTC registered, light vehicles (4.5 tonnes GVM or less) travelling on public roads |
Reduction in excise at the bowser of 32.0 cpl |
No FTC entitlement |
Effective benefit of 32.0 cpl compared to the position prior to 1 April 2026
|
|
Non‑FTC entities and individuals |
Reduction in excise at the bowser of 32.0 cpl |
Not applicable |
Effective benefit of 32.0 cpl compared to the position prior to 1 April 2026 |
Important: Fuel used in light vehicles of 4.5 tonnes GVM or less travelling on public roads remains ineligible for Fuel Tax Credits.
While intended as temporary cost‑of‑living and industry relief, the fuel excise and RUC changes are likely to have a short‑term impact on Federal revenue through lower excise collections and increased Fuel Tax Credit outflows. These measures may add pressure to the upcoming Federal Budget and prompt closer scrutiny of how temporary relief is funded, particularly if there is demand to extend the settings beyond 30 June 2026.
If you would like support updating FTC calculations, reviewing eligibility and substantiation, or assessing cash flow impacts during the three month period, please contact Grant Thornton.
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