The Federal Government Has Acted — Here’s What You Need to Know

Australia is in the middle of a fuel supply crisis triggered by escalating conflict in the Middle East, which has disrupted global oil supply chains and pushed retail petrol above $2.60 per litre in some parts of the country, with diesel exceeding $3.00 per litre. In response, National Cabinet convened and the Federal Government announced a $2.55 billion relief package. Here’s what that means for your business.

What’s in the Package

The key measures now in effect are:

• Fuel excise halved for three months. The excise on petrol and diesel — previously 52.6 cents per litre — has been cut to around 26.3 cents per litre. That translates to roughly $19 off a standard 65-litre tank. The cut applies from late March 2026 for a 90-day period.
• Heavy vehicle road user charge reduced to zero. The 32.4 cents per litre charge on heavy vehicles travelling on public roads has been temporarily eliminated. This is significant for transport operators, logistics businesses, and trades businesses running commercial fleets.
• Scheduled road user charge increase deferred by six months. A previously planned rise to the charge has been pushed back, giving fleet-dependent businesses additional relief.
• Emergency fuel import powers legislated. The government has passed legislation allowing up to $3 billion to be deployed to secure additional fuel shipments without requiring prior parliamentary approval.
• Export Finance Australia empowered to support importers. New powers allow Export Finance Australia to assist companies importing fuel, helping them manage the rising cost and risk of securing supply.

What This Means for Your Tax Position

A few accounting and tax considerations are worth flagging right now:

Fuel Tax Credits (FTC) — rates will change. If your business claims fuel tax credits on your BAS, be aware that the excise reduction will directly affect the rates you can claim. FTC rates are linked to the excise rate, so when the excise drops, your credit rate drops with it. You should not assume your current FTC rate remains unchanged — speak to your accountant before lodging your next BAS.

Heavy vehicle operators — review your BAS position. With the road user charge temporarily at zero, the offset that previously reduced your fuel tax credits no longer applies in the same way. This may actually improve your net FTC position. It’s worth a review.

Operating costs and deductibility. If your business is incurring higher fuel costs in the period before the excise cut flows through to the pump, those costs remain fully deductible in the ordinary course. Keep records of fuel purchases as you normally would.

Cash flow planning. For businesses that have already absorbed significant cost increases over the past few weeks — particularly those in construction, transport, food service, and healthcare — this relief may not fully offset the damage already done. If you are under cash flow pressure, now is a good time to consider your options, including payment arrangements with the ATO and reviewing your working capital position.

What You Should Do Now

1. Don’t assume savings will appear automatically. The excise cut should flow through to prices at the pump over coming days, but there may be a lag. Monitor your fuel costs and keep records.
2. Review your next BAS before lodging. If you claim fuel tax credits, confirm the correct rates with your accountant. Using the wrong rate — in either direction — can result in an incorrect BAS.
3. Talk to us if you’re under financial pressure. The ATO has a track record of working with businesses during genuine hardship. If your cash flow has taken a hit over the past few weeks, there may be options available to you.
4. Watch for further announcements. The government has signalled this is a developing situation. Additional measures — and potentially further tax or financial relief — may be announced in the coming weeks.

Our View

This relief package is a welcome short-term measure, but it is exactly that — short-term. Businesses that depend heavily on fuel or transport should treat this as breathing room, not a permanent fix. Use the next three months to review your cost base, assess your exposure to fuel price volatility, and if appropriate, explore how you can reduce that exposure over the medium term.

This article is general in nature and does not constitute tax or financial advice. Please contact us to discuss your specific circumstances.