On 30 March 2026, the Albanese Government announced a halving of fuel excise. Two days later, the Treasurer issued a further determination cutting excise by an additional 10.9%. The combined result: diesel excise dropped from 52.6 c/L to 20.6 c/L, a total reduction of 60.9%, effective 1 April to 30 June 2026.

Alongside the excise cut, the heavy vehicle road user charge was reduced to zero for the same period. Together these measures deliver about 32.4 cents per litre of relief at the pump for heavy vehicle operators. But the way that relief flows is counterintuitive, and getting your fuel surcharge matrix right requires understanding what changed and what stayed the same.

The two-stage cut: a timeline

• Stage 1 — 30 March 2026
  PM announces fuel excise halving
  Diesel excise drops from 52.6 c/L to 26.3 c/L. Heavy vehicle road user charge cut to zero. Treasury Laws Amendment (Fuel Excise Relief) Bill 2026 passes both Houses the same day, granting the Treasurer power to make further determinations.
• Stage 2 — 2 April 2026
  Treasurer determines additional 10.9% cut
  Following a National Cabinet agreement in which states agreed to forgo approximately $400 million in GST windfall revenue, the Treasurer issues a determination under the new powers cutting excise by a further 10.9%. Combined reduction reaches 60.9%. Operative excise rate becomes 20.6 c/L.
• 7 April 2026
  ATO confirms updated FTC rates
  The ATO publishes its business bulletin confirming “Fuel tax credit rates changed from 1 April 2026 following the temporary reduction in fuel excise by 60.9%.” On-road heavy vehicle FTC confirmed at 20.6 c/L.

What changed, in numbers

Where the relief actually comes from

This is the part most operators are getting wrong. The on-road fuel tax credit barely changed. It went from 20.2 c/L to 20.6 c/L, a difference of less than half a cent. The relief is not coming through your BAS.

The relief is at the bowser. Heavy vehicle operators are paying 32 cents per litre less in excise at the point of purchase, plus another 3.2 cents per litre less in GST (calculated on the lower excise-inclusive price). That is about 35.2 cents per litre off the pump price before any FTC consideration.

The on-road FTC formula is unchanged: excise minus road user charge. With excise at 20.6 c/L and the RUC at zero, the FTC equals 20.6 c/L. That is almost the same as the pre-cut rate of 20.2, which was 52.6 minus 32.4. The two reductions cancel each other out. The combined saving for heavy vehicle operators is approximately 32.4 cents per litre, which exactly matches the eliminated road user charge.

How to update your fuel surcharge formula

Most Australian transport operators use a standard fuel surcharge formula:

Where CFP is the current fuel price (AIP terminal gate price, less GST, less the government rebate), BFP is the base fuel price (locked at contract inception), and Y is the fuel operating cost as a percentage of total freight cost (typically 25%).

Three components of the current fuel price are affected. Two adjust automatically. One requires a manual update.

1. Terminal gate price: no action needed

The AIP terminal gate price already reflects excise at the wholesale level. When excise drops by 32 c/L, the posted TGP drops by approximately the same amount within days. ACCC monitoring of the 2022 excise cut confirmed wholesale prices passed through almost immediately. Continue sourcing the weekly AIP diesel TGP for your city as normal.

2. GST: no action needed

GST at 10% is calculated on the excise-inclusive price. Lower excise means lower GST. When you divide the TGP by 1.1 to strip GST in your formula, this recalculates automatically.

3. Government rebate (fuel tax credit): small update required

This is the manual change. Your fuel surcharge matrix likely has a “Govt Rebate” line representing the on-road heavy vehicle FTC. Update this from $0.202/L to $0.206/L, effective for all calculations using a TGP dated from 1 April 2026 onwards. The change is small (less than half a cent), but it should be reflected for accuracy.

Do not change your base fuel price or its associated historical rebate figure. The BFP is a locked reference point from contract inception.

Cold chain operators: the auxiliary FTC drops hard

Refrigerated transport operators claim fuel tax credits at two different rates. Diesel powering the truck (motive fuel) attracts the on-road heavy vehicle rate. Diesel powering the refrigeration unit (reefer fuel) qualifies as auxiliary equipment and normally attracts the full excise rate with no RUC deduction.

Before April, that gap was significant: motive fuel at 20.2 c/L versus reefer fuel at 52.6 c/L. The ATO’s Practical Compliance Guideline PCG 2016/11 provides a simplified method, allowing operators to claim 10% of total fuel at the higher auxiliary rate.

During the temporary period, both rates converge at 20.6 c/L. The auxiliary rate has crashed from 52.6 to 20.6, a drop of 32 cents per litre. For cold chain operators, this is a significant reduction in the BAS claim on reefer fuel.

However, the bowser saving offsets it. Reefer fuel is purchased at the same lower pump price as motive fuel, and operators are paying 32 c/L less excise on every litre regardless of how it’s consumed. The net effect on cash flow is roughly neutral for reefer fuel: lower FTC claim back, but lower upfront cost. For motive fuel, the net effect is strongly positive.

What to do today: the checklist

Update immediately

• Change “Govt Rebate” from $0.202/L to $0.206/L in your current fuel price calculation
• Continue sourcing the AIP terminal gate price as normal (it already reflects the lower excise)
• Continue dividing TGP by 1.1 to remove GST
• Shift to weekly surcharge recalculation during this volatile period
• Communicate the change to customers proactively

Do not change

• The base fuel price or its historical rebate/GST treatment
• The fuel operating cost percentage (Y factor)
• The GST divisor (still 1.1)
• Your reefer fuel apportionment method

Monitor closely

• Whether AIP TGPs fall by the expected ~35 c/L in the first week of April
• The ATO fuel tax credit rate page for any further updates
• Any announcements about extending the measures beyond 30 June 2026

What to tell your customers

Customers will see a lower fuel surcharge and may ask questions. Here are the key points to communicate:

The fuel surcharge is mechanically recalculating downward due to two government measures: a 60.9% cut to fuel excise and a zeroed road user charge. The relief is delivered at the pump, not through tax credits. This is a temporary three-month measure running to 30 June 2026, and surcharges will recalculate upward when rates revert. International diesel benchmarks remain elevated, and the excise cut only partially offsets the underlying price increase driven by Middle East supply disruptions. The surcharge formula is transparent and auditable against published AIP data and ATO rates.

For operators who update surcharges weekly, customers will see the adjustment flow through in the next calculation cycle. For those on monthly or quarterly updates, consider an interim adjustment given the significance of the change.

What happens after 30 June?

The excise cut is legislated to expire on 1 July 2026. Excise reverts to its full rate (subject to any August CPI indexation), and the road user charge is reinstated. The next scheduled 6% annual RUC increase has been deferred by six months, so the post-reversion RUC may be slightly different from the pre-cut figure.

Plan now. When rates revert, your “Govt Rebate” line reverts too. The June quarter BAS will likely involve the special rate, but record-keeping needs to clearly show fuel purchased before 1 April (at old rates) and from 1 April (at the temporary rates) for split-period treatment. Build a dated schedule of which rate applies in which period to avoid headaches at lodgement time.