If it feels like rising fuel prices are quietly eroding your bottom line, you’re not imagining it.
For many Australian businesses, the impact isn’t just at the bowser. Higher fuel costs are flowing through freight, transport and suppliers, putting pressure on cash flow and making it harder to stay on top of tax obligations.
The ATO has acknowledged this strain and, in response, has introduced a temporary support approach designed to give affected businesses some breathing room while costs remain elevated.
Support is available until 30 June 2026 and centres around flexibility rather than forgiveness.
What support is on the table?
Depending on your situation, the ATO may offer:
Flexible payment plans
Businesses can negotiate tailored arrangements for existing or new tax debts. These plans can run for up to three years and, in many cases, don’t require an upfront payment, which can make a big difference when cash is tight.
Reduced interest and penalties
If you engage early and stick to a payment plan, the ATO may remit interest charges. Generally, once the first three months of agreed payments are made, interest accrued during that initial period can be written off.
PAYG instalment adjustments
When rising fuel costs reduce profitability, PAYG instalments based on last year’s results often no longer make sense. The ATO is encouraging businesses to adjust instalments so tax payments better reflect current conditions, easing short-term cash flow.
A more supportive compliance approach
The ATO has signalled it will prioritise supporting businesses that can demonstrate fuel-driven financial stress, rather than applying a one-size-fits-all enforcement mindset.
Who is eligible for the Fuel Response Package?
To be eligible for the ATO fuel response package, applicants must hold an Australian Business Number (ABN) and demonstrate four specific criteria:
- Fuel prices have increased operating costs – directly or through suppliers and freight
- There is an existing tax debt that can’t presently be serviced
- Without higher fuel costs, obligations could have been met
- All outstanding tax lodgements will be brought up to date within three months
- Avoids unnecessary penalties
- Signals good faith
- Allows the ATO to properly assess support options
In short, this is aimed at businesses experiencing a cost shock, not underlying viability issues.
Practical steps to take now
ATO flexibility works best when it’s part of a broader plan, not a last‑ditch move. A few smart actions can significantly improve your position.
Understand where the pressure is coming from
Quantify how fuel costs are affecting your cash flow. Is the impact temporary, or does it change your cost structure longer term? This insight is critical when discussing support options.
Act before you miss a payment
Early engagement matters. If forecasts show upcoming tax or super payments may be difficult, raising it early strengthens your options and helps protect directors from personal exposure for unpaid super or PAYG withholding.
Lodge on time, even if you can’t pay
This is one of the most overlooked but important steps. Timely lodgement:
Review PAYG instalments sooner rather than later
Adjusting instalments now can prevent cash being tied up in overpaid tax while margins are under pressure.
Your next steps
Support from the ATO can be a valuable circuit-breaker during periods of cost volatility but it works best alongside clear cash flow modelling, accurate forecasts and early advice. With the right preparation and timely engagement, businesses can stabilise cash flow and stay on the front foot while fuel pressures remain elevated.
Want to ensure you are eligible for the Fuel Response Package? Contact our expert advisors today and gain the clarity you need to achieve financial success.
With more than 20 years’ experience advising small business owners, Matthew brings deep expertise, genuine care and a practical, real‑world perspective to his role as Partner. Growing up in a family of entrepreneurs running diverse businesses, Matthew knows the challenges and opportunities facing small business owners, and how to work together to achieve the best outcomes.