The government slashed fuel excise. What does it mean for your Fuel Tax Credits?

What did the Australian Government announce?

With a supply crunch creating a sudden surge in crude prices, the Government has moved to ease pressure on households and businesses alike. Prime Minister Anthony Albanese announced a range of temporary fuel relief measures following a National Cabinet meeting. The key measures, effective 1 April to 30 June 2026, are:

• Fuel excise reduced by 60.9% from 52.6 cents per litre (CPL) to 20.6 CPL
• Heavy vehicle road user charge (RUC) suspended

For fleet operators, a lower price at the bowser is welcome news. But for businesses who claim fuel tax credits, these measures will add some complexity.

“Given the size and speed of these changes, we expect continued ATO focus on Fuel Tax Credit claims. Those who invest now in getting their data and processes right will be best placed to navigate the mixed outcomes and manage their risk,” according to Anthony Harmer, Director – Indirect Tax from KPMG. 

How do fuel tax credits normally work for fleet operators?

Fuel tax credits allow eligible businesses to claim back the fuel tax (excise) included in the price of diesel and petrol used for business purposes. The credit rate depends on how the fuel is used:

• Heavy vehicles travelling on public roads: FTC equals the fuel excise minus the RUC, which represents the portion of excise retained for road infrastructure funding.
• Heavy vehicles travelling on private roads or off road: FTC equals the full excise rate, because no road cost recovery applies.

In practice, many operators use both public and private roads. For this reason they must divide their claims between the two rates. Using the ATO's published rates from 2 February 2026, the position before 1 April looked like this:

For the current published rates, refer to the ATO fuel tax credit rates page.

How will FTC rates work after April 1, 2026?

Many operators will assume that reducing the excise by 60.9% means that their FTC will be reduced by the same amount. That’s not exactly right. 

The interaction between the FTC and the RUC means the picture is a little more complex. But for many operators, the news will be welcome. 

Heavy vehicles on public roads

With the RUC set to zero, heavy vehicles travelling on public roads can now claim Fuel Tax Credits equal to the full excise duty on the fuel they use. That is a clear positive outcome for operators with a high proportion of on‑road fuel usage. In fact, heavy vehicle operators are actually entitled to slightly more FTC per litre than before. 

Previously, the combination of FTC and RUC meant that heavy vehicle operators using public roads could effectively claim 20.2 cents per litre (CPL). That number has increased.   

Off-road and other eligible business uses

Operators with significant off-road fuel consumption — including those in mining, construction, agriculture and utilities — will see a material drop in their FTC entitlements for the April to June quarter.

Of course, it should be noted that this doesn’t mean that businesses who operate away from public roads are paying more in excise. The money can’t be reclaimed because it wasn’t paid at the bowser in the first place.  

If you use fuel on and off-road, what do you need to know? 

If your fleet operates across both on-road and off-road environments, this quarter demands close attention. The divergence between the two FTC rates means that accurately categorising your fuel usage — and having the data to support it — is crucial. 

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Operators who cannot clearly demonstrate how much fuel was consumed on public roads versus off-road risk either underclaiming or overclaiming.

“For heavy vehicle operators, the removal of the RUC for three months means that on‑road and off‑road use now attract the same nominal Fuel Tax Credit rate, but from a much lower excise base. Accurately understanding and evidencing fuel use, supported by robust records, fleet systems and telematics, remains essential,” according to Anthony Harmer, Director – Indirect Tax from KPMG. 

How this is different from the 2022 excise cut

In March 2022, the Government also reduced the fuel excise for six months. However, in 2022 the road user charge was not reduced. That meant the RUC (then 26.4 CPL) exceeded the reduced excise rate, and the heavy vehicle on-road FTC effectively fell to zero.

The 2026 measure is fundamentally different. By suspending the RUC, the Government has protected heavy vehicle operators from the same outcome. 

Some early industry commentary — including posts on social media — has referenced the 2022 precedent without accounting for the RUC suspension. If you have seen advice suggesting your FTC will drop to zero, check the source and confirm whether the RUC suspension has been factored in.

What should you do before you lodge your next BAS?

The Government has paused further increases until 1 January 2027 and the ATO is offering targeted support to businesses struggling to meet their tax payments. Even so, the onus is still on businesses to manage compliance and understand the impact on their position. For this reason, KPMG is encouraging businesses to:

1. Ensure they apply the correct Fuel Tax Credit rates for fuel acquired before and after 1 April 2026.
2. Model the impact of the reduced excise rate on both off‑road and on‑road Fuel Tax Credits
3. Review how the temporary suspension of the RUC affects their heavy vehicle claims and cash flow
4. Review any fuel levies or fuel recovery mechanisms in their customer and supplier contracts to ensure these changes are accurately reflected and transparently managed
5. Consider whether ATO support options are available where higher fuel costs and changing FTC outcomes are creating pressure.

Businesses should also talk to their accountants. Every fleet's fuel profile is different, and it’s important to get specific advice on how the rate changes apply to your operation.

How does accurate data take the pain out of FTC claims?

It has never been more important to use telematics to remove the complexity from fuel management — not just for FTC compliance, but across every area of your transport operation where fuel savings are available.

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“Navigating rate changes like these is exactly where fleet technology really earns its keep. It helps businesses identify savings, reduces the hours that go in lodging an FTC claim and keeps businesses compliant,” said Andrew Hintz, Associate Vice President for Heavy Transport, APAC.  

With Geotab and its Marketplace partners, fleet operators can:

• Capture precise fuel consumption data in real time, matched to individual vehicles, trips and dates, providing the date-stamped acquisition records the ATO requires.
• Distinguish on-road and off-road fuel usage using GPS trip data and distance reporting, which is critical for splitting FTC claims between the two rate categories this quarter.
• Identify fuel savings opportunities beyond FTC, including reducing excessive idling, improving driver behaviour, optimising routes and benchmarking fuel efficiency across your heavy vehicle fleet.
• Produce defensible, audit-ready records using MyGeotab's fuel and odometer reports — reducing the risk of under- or overclaiming.

When fuel prices are this volatile and policy settings are shifting quarter to quarter, operators who have visibility across their entire fuel spend are the ones best positioned to protect their margins. For practical strategies, see our guide on how to reduce fuel consumption and our analysis of heavy vehicle fuel consumption trends in Australia.

Ready to take control of your fleet's fuel data? Get a demo or speak to your Geotab representative about how MyGeotab can simplify your FTC calculations and uncover fuel savings across your operation.