EXPLANATORY STATEMENT
Issued by authority of the Treasurer
Excise Tariff Act 1921
Excise Tariff (Fuel Duty Temporary Reduction) Determination 2026
Subsection 6K(5) of the Excise Tariff Act 1921 (the Act) provides that the Treasurer may determine a greater reduction to the CPI indexed fuel rate than the 50 per cent that otherwise applies during the period beginning on 1 April 2026 and ending on 30 June 2026.
The purpose of the Excise Tariff (Fuel Duty Temporary Reduction) Determination 2026 (the Instrument) is to assist in easing some of the impact of recent fuel price increases resulting from the conflict in the Middle East by providing a temporary further reduction in fuel excise and excise-equivalent customs duties beyond the 50 per cent reduction that would otherwise apply for the period 1 April 2026 to 30 June 2026.
The Treasurer has determined a lower percentage of 39.1 per cent for the purposes of paragraph 6K(1)(b) of the Act. This has the effect of reducing the CPI indexed fuel rate to 39.1 per cent of rates applying as at 31 March 2026, which benefits users of fuel products, such as petrol and diesel, as it provides an overall 60.9 per cent reduction in the fuel excise.
This 60.9 per cent reduction also applies to the excise-equivalent customs duty rates as a consequence of subsection 19AABA(1) of the Customs Tariff Act 1995 which was included by the Treasury Laws Amendment (Fuel Excise Relief) Act 2026.
The Instrument provides a further reduction in duty rates in addition to the reduction provided by the Treasury Laws Amendment (Fuel Excise Relief) Act 2026 to give effect to arrangements with the states and territories to return some additional GST receipts arising from fuel price increases to fuel users in the form of an additional reduction in fuel duties.
The Act does not specify any conditions that need to be satisfied before the power to make the Determination may be exercised.
Consultation has been undertaken with affected Commonwealth and State Government stakeholders and they are supportive of the Instrument.
The Instrument is estimated to have no impact on the Commonwealth underlying cash balance over the forward estimates period as the States and Territories have agreed to provide compensation to the Commonwealth arising from the fuel duty rate reduction.
The Determination is subject to disallowance under section 42 of the Legislation Act 2003.
The Determination commenced on 1 April 2026. Retrospective application is appropriate as the reduced duty rates that apply from 1 April 2026 are wholly beneficial for affected manufacturers, producers, importers and users of fuels, including petrol and diesel and similar petroleum-based products as the Instrument results in the temporary reduction in the rates of duty payable. The retrospective application is not affected by subsection 12(2) of the Legislation Act 2003.
Details of the Instrument are set out in Attachment A.
A statement of Compatibility with Human Rights is at Attachment B.
ATTACHMENT A
Details of the Excise Tariff (Fuel Duty Temporary Reduction) Determination 2026
Section 1 – Name
This section provides that the name of the instrument is the Excise Tariff (Fuel Duty Temporary Reduction) Determination 2026 (the Instrument).
Section 2 – Commencement
The Instrument commenced on 1 April 2026.
Section 3 – Authority
The Instrument is made under subsection 6K(5) of the Excise Tariff Act 1921 (the Act).
Section 4 – Definitions
This section provides expressions used in the Instrument have the same meaning as in the Excise Tariff Act 1921 and defines the Act as the Excise Tariff Act 1921 for the purposes of the Instrument.
Section 5 – Determination of lower percentage
Subsection 6K(5) of the Act provides that the Treasurer will have the power to determine a greater percentage reduction to the ‘CPI indexed fuel rate’ than the 50 per cent that otherwise applies during the ‘rate reduction period’. This is achieved by determining a percentage amount lower than 50 per cent that applies to the full rate of duty to establish the duty rate.
For the purposes of paragraph 6K(1)(b) of the Act, the Treasurer has determined 39.1 per cent is the lower percentage. This has the effect of reducing the CPI indexed fuel rate to 39.1 per cent, which has the effect of providing an overall 60.9 per cent reduction in the fuel excise under the Act.
To ensure that excise-equivalent customs duty rates under the Customs Tariff Act 1995 (Customs Tariff Act) remain consistent with the reductions to fuel excise determined by the Treasurer, subsection 19AABA(1) of the Customs Tariff Act provides that the percentage of the fuel duty rate is 50 per cent unless the Treasurer has determined a lower percentage under subsection 6K(5) of the Excise Tariff Act, in which case it is the lower percentage.
To illustrate, during a rate reduction period, the CPI indexed fuel rate is ordinarily 50 per cent during the ‘rate reduction period’. However, as the Treasurer has determined a lower percentage of 39.1 per cent, the ‘CPI indexed fuel rate’ is 39.1 per cent of the rates applying as at 31 March 2026, which benefits users of fuel products as it provides an overall 60.9 per cent reduction in the duty rate.
The lower percentage applies for the ‘rate reduction period’, being the period starting on 1 April 2026 and ending on 30 June 2026 (inclusive).
ATTACHMENT B
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Excise Tariff (Fuel Duty Temporary Reduction) Determination 2026
This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the Legislative Instrument
The purpose of the Excise Tariff (Fuel Duty Temporary Reduction) Determination 2026 (the Instrument) is to assist in easing some of the impact of recent fuel price increases resulting from the conflict in the Middle East by providing a temporary further reduction in fuel excise and excise-equivalent customs duties, where a 50 per cent reduction would otherwise apply.
The Treasurer has determined a lower percentage of 39.1 per cent for the purposes of paragraph 6K(1)(b) of the Excise Tariff Act 1921 (the Act). This has the effect of reducing the CPI indexed fuel rate to 39.1 per cent of the rates applying as at 31 March 2026 and benefits users of fuel products as it provides an overall 60.9 per cent reduction in the fuel excise and excise-equivalent customs duty rates for the period 1 April 2026 to 30 June 2026 (inclusive).
Human rights implications
This Legislative Instrument engages the following rights:
Right to an adequate standard of living
The Instrument engages the right to an adequate standard of living, including food, water and housing under Article 11 of the International Covenant on Economic, Social and Cultural Rights.
The right to an adequate standard of living provides that Australia must take appropriate steps towards the realisation of this right in its jurisdiction, and that the relevant standard must be continuously improving.
The Instrument is consistent with the standard of living in Australia.
The Instrument provides relief to consumers for part of the cost of fuel where a determination is made by the Treasurer. The objective of the Instrument, which is to ease pressures on fuel prices in Australia resulting from the conflict in the Middle East, is necessary to provide the relief. The objective of the Instrument addresses the rising cost of fuel.
The Instrument is rationally connected to easing pressures on fuel prices in Australia, as it is an effective way to achieve that objective. Reducing the excise and excise-equivalent customs duty rates reduces the excise on fuel by 60.9 per cent and when passed on to consumers, this will reduce the price they pay for fuel they pay. Finally, the Instrument is a proportionate response to the rising cost of fuel in Australia because the Instrument directly impacts the price of fuel in Australia and benefits users of fuel products.
Conclusion
The Legislative Instrument is compatible with human rights because the extent that it may limit human rights, those limitations are reasonable, necessary and proportionate.