ATO Fuel Response Payment Plan
- Nijo Antony
- Apr 13
- 4 min read
Updated: Apr 21
There is no doubt that rising fuel costs are putting pressure on small businesses. For some, the impact is direct through diesel, petrol, machinery and vehicle usage. For others, it is flowing through more quietly in the form of higher freight charges, supplier costs, delivery expenses and general operating costs.
To help businesses through this period, a temporary ATO Fuel Response Payment Plan is available for eligible businesses until 30 June 2026.
This measure gives some businesses the opportunity to restructure tax debts into a more manageable payment arrangement where cash flow has been affected by higher fuel-related costs. It is not just for transport operators either. It may also be relevant for trades, service businesses, regional operators, primary producers and any business feeling the knock-on effect of increased fuel and logistics costs.
What support is available?
Eligible businesses may be able to access a tailored payment arrangement over a period of up to 36 months, with no upfront payment required.
There is also scope for General Interest Charge (GIC) to be remitted from the date of application to the third instalment, provided the arrangement is maintained properly and lodgements are brought up to date. In some cases, penalties may also be remitted.
On top of that, businesses may be able to review and vary their PAYG instalments where profits have reduced as a result of higher fuel and operating costs.
For businesses under genuine pressure, this can provide some breathing space and help avoid matters escalating unnecessarily.
Who may be eligible?
In broad terms, eligibility will depend on whether the business:
has an ABN
has been impacted by higher fuel costs, either directly or indirectly
has a new or existing tax debt that it cannot currently service
would likely have been able to meet its obligations under more normal fuel cost conditions
is prepared to bring all outstanding lodgements up to date within 3 months of the plan starting.
That last point is important. If lodgements are behind, they will need to be brought up to date quickly. A payment arrangement is not a substitute for keeping compliance in order.
The bigger issue for business owners
While a payment plan may help with the immediate tax debt, it does not fix the underlying commercial problem.
If fuel, freight and supplier costs have risen, those increases need to be reflected somewhere. In many cases, business owners have been absorbing these costs for too long, hoping things settle down, only to find that margins have quietly eroded and tax debts have started to build in the background.
That is why this is not just a tax issue. It is also a pricing and profitability issue.
Now is the time to review:
whether your pricing still reflects your actual costs
whether a fuel surcharge should be introduced
whether freight or delivery charges need to be updated
whether margins are still where they need to be
whether PAYG instalments should be varied
whether cash flow forecasts for the rest of the year are still realistic.
Example: If your business was paying around $1.60 per litre for diesel before the current fuel shock, and is now paying around $3.25 per litre, the cost has increased by $1.65 per litre. Even with the Government’s fuel excise relief measures, diesel prices have still moved sharply higher.
If the business uses 2,000 litres of diesel per month, that means:
previous monthly fuel cost: $3,200
current monthly fuel cost: $6,500
additional monthly cost: $3,300
additional annual cost: $39,600
That is a serious extra cost for any small business to carry.
For many operators, that sort of increase is the difference between making a decent margin and working far too hard for very little return. If those costs are not being recovered through pricing, freight recovery, service charges or fuel levies, the business owner usually ends up funding the gap themselves.
In practical terms, that usually shows up in one or more of the following ways:
margins get squeezed
cash flow tightens
tax debts start building in the background
profits look reasonable on paper, but the bank account tells a different story.
That is why this needs to be looked at from both angles. A payment plan may help relieve the immediate ATO pressure, but the bigger issue is making sure the business is charging enough to recover the increased cost going forward.
What should businesses do now?
If fuel costs are affecting your business, it would be sensible to act early rather than wait until the debt becomes harder to manage.
That includes:
bringing lodgements up to date
reviewing your current tax debt position
checking whether your PAYG instalments are still appropriate
looking closely at pricing, margins and fuel recovery
considering whether the Fuel Response Payment Plan may be suitable.
How we can help
If your business has been impacted by rising fuel costs, we can help review your position, assess whether this relief may be available, assist with payment plan applications, and work through whether your pricing and margins need to be adjusted.
A payment plan can help buy time, but getting the numbers right in the business is what will make the real difference over the longer term.
If you would like help working through the numbers or reviewing whether a fuel surcharge, margin increase or broader repricing strategy makes sense for your business, please get in touch.
Nijo Antony
Director
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