Treasury Laws Amendment (Fuel Excise Relief) Bill 2026

The Act directly affects entities that pay or collect excise duty and customs duty on fuel, including importers, oil companies, distributors and retailers who lodge excise and customs entries. It also affects businesses and individuals who claim fuel tax credits under the Fuel Tax Act 2006, particularly those whose credit entitlement is reduced by the road user charge component. Transport operators, farmers, miners and other off-road fuel users will experience changes in the net cost of fuel once the road user charge rate is determined under the new ministerial power. The Commonwealth revenue base is reduced for the three-month rate reduction period because the effective duty rate falls to 50 percent or lower. State and territory governments that receive fuel excise revenue shares or that rely on fuel price movements for budget indexation are indirectly affected. Consumers purchasing petrol or diesel at retail outlets may see price adjustments reflecting the lower duty, although the extent of pass-through depends on commercial decisions by retailers. The Australian Taxation Office and the Department of Home Affairs must administer the reduced rates and process any amended returns or drawback claims arising from the changed duty. The Department of Infrastructure, Transport, Regional Development, Communications and the Arts, through the Transport Minister, gains operational flexibility in setting the road user charge.

Motorists and small businesses will want to know the practical impact on pump prices. The Act reduces the excise and customs duty component by half for the period 1 April 2026 to 30 June 2026, which historically represents roughly 40 to 50 cents per litre before GST for unleaded petrol and diesel. Whether that saving flows through depends on retailer margins and wholesale pricing. Fleet operators and primary producers will ask how the road user charge adjustment interacts with fuel tax credit claims for the 2025-26 and 2026-27 financial years. The Transport Minister can now set that charge rate after the fact, so credit calculations for those years remain open until a determination is made. Taxpayers will also want to know whether the Treasurer will exercise the power to set a percentage lower than 50 percent. Any such determination must be made by legislative instrument and will be subject to disallowance. Importers and excise manufacturers need to know the precise commencement dates: Schedules 1 and 2 apply from 1 April 2026, while Schedule 3 applies from 2 April 2026, affecting the timing of any amended excise returns. Finally, accountants and tax advisers will seek clarity on whether the temporary rate reduction creates any special record-keeping or apportionment obligations when fuel is purchased partly within and partly outside the rate reduction period.

The Bill received royal assent on 1 April 2026 and is now Act No. 22 of 2026. All parliamentary stages were completed on 31 March 2026 in both the House of Representatives and the Senate. The Act is therefore fully enacted and no further legislative action is required. The Australian Taxation Office and the Department of Home Affairs will issue updated administrative guidance and revise excise and customs systems to apply the 50 percent rate, or any lower rate determined by the Treasurer, for the period 1 April 2026 to 30 June 2026. The Transport Minister may issue one or more legislative instruments setting the road user charge rate for the 2025-26 and 2026-27 financial years at any time, including after 1 July 2026. Those instruments will be registered on the Federal Register of Legislation and tabled in Parliament. No further parliamentary consideration of the Act itself is scheduled. Stakeholders should monitor the Federal Register for any Treasurer determination under subsection 6K(5) of the Excise Tariff Act 1921 and any Transport Minister determination under subsection 43-10(13) of the Fuel Tax Act 2006.

The Act creates two new discretionary powers. First, subsection 6K(5) of the Excise Tariff Act 1921 authorises the Treasurer to determine, by legislative instrument, a percentage lower than 50 percent for the purposes of the rate reduction formula in subsection 6K(1). The same power appears in the amended subsection 19AABA(1) of the Customs Tariff Act 1995. The determination may be made at any time during or after the rate reduction period. Second, subsection 43-10(13) of the Fuel Tax Act 2006 confers power on the Transport Minister to determine a rate of road user charge for days falling within the 2025-26 or 2026-27 financial years, including by varying an earlier determination, and to do so after the day to which the rate applies. No new duties are imposed on private parties. Existing obligations to pay excise and customs duty continue, albeit at the reduced rate during the rate reduction period. Taxpayers retain the right to claim fuel tax credits under the Fuel Tax Act 2006, subject to the road user charge component that may be set by the Transport Minister. The Act does not create any new rights of review beyond those already available under the taxation laws for decisions made under the new powers.

The Act reduces the amount of excise and customs duty collected on fuel for the three months from 1 April 2026 to 30 June 2026 by applying a 50 percent multiplier, or a lower percentage if determined by the Treasurer. No new penalties or offences are created. Enforcement of the reduced rates occurs through the existing machinery of the Excise Act 1901, the Customs Act 1901 and the Fuel Tax Act 2006. Importers and excise manufacturers must still lodge returns and pay duty, but the rate applied to CPI indexed fuel rates during the rate reduction period is halved. Fuel tax credit claims continue to be processed by the Commissioner of Taxation, with the road user charge component now capable of being set by ministerial determination rather than automatic statutory formula. Any underpayment or overpayment arising from the rate change is recoverable or refundable under the ordinary taxation laws. The Act does not alter the penalty regime for false statements, late payment or evasion. Revenue forgone during the rate reduction period will appear in the Commonwealth budget as a reduction in taxation receipts for the 2025-26 and 2026-27 financial years.

The parliamentary record indicates that second reading amendments were proposed by crossbench members in the House of Representatives and by the Australian Greens and the Opposition in the Senate, yet the Act passed without alteration to the text introduced by the government. Because the content of those amendments is not recorded in the official materials, the precise points of disagreement cannot be identified. Policy trade-offs that arise from the enacted provisions include the choice of a strict three-month window rather than a longer or open-ended relief period, the decision to tie the reduction to CPI indexed rates only, and the conferral of retrospective power on the Transport Minister to set the road user charge. These features create tension between immediate cost-of-living relief for fuel users and the need to maintain predictable revenue for road infrastructure funding. The ability of the Treasurer to substitute a lower percentage by legislative instrument introduces an element of executive discretion that may be exercised without further parliamentary debate, subject only to disallowance. Interaction between the temporary duty reduction and the altered road user charge determination process may produce uneven outcomes for different classes of fuel users depending on when fuel is purchased and when the Minister makes a determination.

With royal assent having occurred on 1 April 2026, the changes are now operative. From 1 April 2026 until 30 June 2026, the excise and customs duty payable on each litre of CPI indexed fuel is 50 percent of the rate that would otherwise apply after CPI indexation, unless the Treasurer determines a lower percentage. The Transport Minister may, at any time, determine or vary the road user charge rate applicable to the 2025-26 and 2026-27 financial years, and any such determination can apply to days before it is made. Fuel tax credit claimants must therefore await the Minister's determination before finalising credit calculations for those years. Administrative systems of the Australian Taxation Office and the Department of Home Affairs have been updated to apply the reduced rates to entries lodged on or after 1 April 2026. No further legislative steps are required for these changes to take full effect. The temporary nature of the rate reduction means that from 1 July 2026 the ordinary CPI indexed rates resume unless further legislation is enacted.

1. Three-month fuel duty cut now law: The Act halves excise on petrol and diesel from 1 April to 30 June 2026, with scope for the Treasurer to deepen the cut. 2. Road user charge can be set retrospectively: Transport Minister gains power to fix the charge for 2025-26 and 2026-27 after the fact, affecting fuel tax credit claims. 3. Treasurer holds further relief lever: A single legislative instrument can lower the 50 percent rate without new legislation, subject to parliamentary disallowance. 4. Fuel tax credit calculations remain open: Businesses claiming credits for the next two financial years must monitor a ministerial determination that may arrive late. 5. No new penalties, just lower rates: Existing compliance obligations continue, but the amount of duty payable during the rate reduction period is materially reduced. 6. Temporary relief only: Duty rates revert to full CPI indexed levels on 1 July 2026 unless Parliament acts again. 7. Crossbench proposed changes but text unchanged: Amendments were moved in both chambers yet the Act passed in the exact form introduced by the government. 8. Practical price impact depends on retailers: The duty saving is roughly half the usual excise component, yet pump prices will reflect commercial pricing decisions as well as the statutory reduction.