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Federal Budget 2022-23 | March: Fuel excise relief

Federal Budget 2022-23 | March: Fuel excise relief

In response to growing cost of living pressures, the Government has announced a temporary reduction in fuel excise of 50% equal to 22.1 cents per litre.

Temporary excise reduction

As highlighted in the lead up to the Budget, the Government has announced a temporary 50% reduction in the excise imposed on fuel, bringing the excise from 44.2 to 22.1 cents per litre. Providing a saving to both consumers and businesses this measure will be in place for a period of 6 months commencing on 30 March 2022 and ending on 28 September 2022. For businesses that claim full fuel tax credits, for example off road heavy machinery operators, the change will be irrelevant as they will continue to claim full fuel tax credits albeit at the lower rate.

The current fuel tax credit entitlement for heavy vehicles travelling on a public road is reduced by the road user charge, leaving operators with a net entitlement of 17.8 cents per litre.  With the reduction in excise, operators of heavy vehicles used for travelling on public roads will be 4.3 cents per litre better off.

The measure will be of most benefit to light vehicle business operators and private consumers who will receive the full 22.1 cent saving per litre. This excise reduction will also reduce the amount of GST payable by a further 2.21 cents per litre. In this sense the measure is well targeted.

The benefit of this measure is expected to flow through to consumers within a few weeks as petrol stations replenish their stocks.

Excise payment concession

As part of its cash flow support and red tape elimination measures, the Government has announced that manufacturers, importers and distributors in the alcohol and fuel sectors with a turnover of less than $50 million will be able to report their excise and excise equivalent customs duty on a quarterly basis.

At present these entities must report monthly and even weekly, so the change will have a significant cash flow impact on these taxpayers. This measure is due to commence on 1 July 2023.

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This content is general commentary only and does not constitute advice. Before making any decision or taking any action in relation to the content, you should consult your professional advisor. To the maximum extent permitted by law, neither Pitcher Partners or its affiliated entities, nor any of our employees will be liable for any loss, damage, liability or claim whatsoever suffered or incurred arising directly or indirectly out of the use or reliance on the material contained in this content. Pitcher Partners is an association of independent firms. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities. Liability limited by a scheme approved under professional standards legislation.

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