ATO Fuel Response and April 2026 Changes to Fuel Tax Credits

What businesses need to know

In late March 2026, the Australian Government announced the National Fuel Security Plan in response to sustained increases in fuel and transport costs. As part of that plan, the Australian Taxation Office (ATO) released its ATO Fuel Response, confirming how these temporary measures are being administered from 1 April 2026.

For many businesses – particularly those in transport, agriculture, construction and other fuel‑intensive industries – these changes have a direct impact on fuel tax credit (FTC) entitlements, Business Activity Statements (BAS), and short‑term cash flow.

What is the ATO Fuel Response?

From a tax perspective, the key elements are:

• A temporary reduction in fuel excise for three months
• A corresponding change to fuel tax credit rates
• A temporary reduction of the Heavy Vehicle Road User Charge (RUC) to nil
• Targeted ATO support measures for businesses experiencing cash‑flow pressure as a result of higher fuel costs

How fuel tax credits are affected from 1 April 2026

Fuel tax credits are calculated based on the excise included in the price of fuel at the time it was acquired, adjusted for how the fuel is used.

Because excise and the Heavy Vehicle RUC have both changed, new fuel tax credit rates apply from 1 April 2026.

Importantly:

• Different rates apply before and after 1 April 2026, meaning some businesses may need to use more than one rate in the same BAS period
• For heavy vehicles travelling on public roads, the temporary reduction of the RUC to zero changes the way credits are calculated
• For off‑road and auxiliary equipment use, fuel tax credit rates have generally reduced in line with the lower excise

The ATO has updated its published fuel tax credit rates and calculators, and these should be used when preparing your upcoming BAS.

ATO support for businesses under pressure

Beyond fuel tax credit changes, the ATO Fuel Response also introduces a targeted support package for businesses experiencing genuine difficulty meeting their tax obligations due to fuel costs.

Key elements include:

• A temporary ATO fuel response payment plan, offering:
  
  • No upfront payment
  • Repayment terms of up to 36 months
  • Potential remission of general interest charge (GIC) if conditions are met
• A more flexible approach to penalties and interest remission
• The ability to vary PAYG instalments where taxable income has fallen
• A practical compliance approach, provided businesses engage early and remain up to date with lodgements

These measures are available by application until 30 June 2026 and are designed to support cash flow rather than forgive debt.

What businesses should do now

Given the short‑term nature of these changes, proactive management is essential. We recommend:

1. Reviewing fuel usage and FTC calculations
   Utilise the available ATO tools. The ATO Fuel Tax Credit Calculator remains the most reliable way to apply the correct rates.
2. Monitor cash flow early
   If fuel costs are creating broader tax payment difficulties, investigate ATO support options sooner rather than later.
3. Seek advice where claims are significant
   Fuel tax credits remain a key ATO audit focus area, especially during periods of rate volatility.

Getting fuel tax credits right now can help protect cash flow, avoid errors, and reduce compliance risk during a period of heightened ATO attention.

If you would like assistance reviewing your fuel tax credit position or accessing ATO support measures, please speak with your trusted Murray Nankivell advisor.