Fuel Tax Credits
Treasury
AI summary
Treasury's fuel tax credits (FTC) forecasting model projects net FTC expenses declining from $10.5 billion (2024-25) to a low of $10.3 billion (2025-26) before rising to $13.1 billion by 2029-30. The model calculates eligible fuel volumes across diesel, petrol, fuel oil, and LPG, applying weighted-average credit rates that increase from $0.506-$0.165/litre (diesel-LPG respectively) in 2024-25 to $0.581-$0.189/litre by 2029-30. Diesel dominates costs at $12.0-$14.8 billion annually across the forecast period, with eligible use rates around 66%. Road user charges (RUC) offsets reduce gross FTC by approximately $2.4 billion yearly. The document assumes petrol and fuel oil growth of 2% annually, while LPG usage remains flat at 221 ML. The modelling underpins budget preparation for the 2026-27 fiscal year.
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OFFICIALS: Sensitive Legal Privilege FOI 4352 Document 1 # Model Here all information is collected from specific tabs and combined to create a wholistic model of FTC expense per year. Net FTC = Gross FTC - RUC | Budget (V3) 2026-27 | 2024-25 | Forecast years | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | 2025-26 | 2026-27 | 2027-28 | 2028-29 | 2029-30 | | | Diesel | | | | | | | | | Total Diesel Clearances | ML | 34,189 | 34,876 | 35,485 | 36,317 | 37,261 | 38,226 | | Eligible Use | % | 70.1% | 66.4% | 66.0% | 66.51% | 66.4% | 66.4% | | Eligible Diesel | ML | 23,966 | 23,151 | 23,431 | 24,155 | 24,745 | 25,390 | | FTC credit rate (wight. Avg) | $/L | 0.506 | 0.520 | 0.542 | 0.554 | 0.567 | 0.581 | | Crediting Rate | % | 100% | 100% | 100% | 100% | 100% | 100% | | Diesel FTC | $m | 12,121 | 12,027 | 12,705 | 13,372 | 14,039 | 14,760 | | Petrol | | | | | | | | | Petrol Growth (assumed) | % | | 2% | 2% | 2% | 2% | 2% | | Petrol (assumed use) | ML | 16,341 | 16,341 | 16,400 | 16,434 | 16,469 | 16,505 | | Eligible use | | 7.85% | 7.65% | 8.15% | 8.25% | 8.25% | 8.17% | | Eligible Petrol | | 1,283 | 1,250 | 1,337 | 1,356 | 1,359 | 1,348 | | FTC credit rate (wight. avg) | $/L | 0.506 | 0.520 | 0.542 | 0.554 | 0.567 | 0.581 | | Crediting rate | % | 100% | 100% | 100% | 100% | 100% | 100% | | Petrol FTC | $m | 649 | 649 | 725 | 751 | 771 | 784 | | Fuel Oil | | | | | | | | | Fuel Oil Growth (assumed) | % | | 2% | 2% | 2% | 2% | 2% | | Fuel Oil Clearances (assumed use) | ML | 184 | 187 | 191 | 195 | 199 | 203 | | Eligible use | % | 30% | 20% | 20% | 20% | 20% | 20% | | Eligible Fuel Oil | ML | 55 | 37 | 38 | 39 | 40 | 41 | | FTC credit rate (wight. avg) | $/L | 0.506 | 0.520 | 0.542 | 0.554 | 0.567 | 0.581 | | Crediting rate | % | 100% | 100% | 100% | 100% | 100% | 100% | | Fuel Oil FTC | $m | 28 | 19 | 21 | 22 | 23 | 24 | | LPG | | | | | | | | | LPG (assumed use) | ML | 221 | 221 | 221 | 221 | 221 | 221 | | Eligible Use | % | 20% | 20% | 20% | 20% | 20% | 20% | | Eligible LPG | ML | 44 | 44 | 44 | 44 | 44 | 44 | | FTC credit rate (wight. avg) | | 0.165 | 0.170 | 0.177 | 0.181 | 0.185 | 0.189 | | LPG FTC crediting rate | % | 100% | 100% | 100% | 100% | 100% | 100% | | LPG FTC | $m | 7 | 8 | 8 | 8 | 8 | 8 | | Gross FTC | $m | 12,811 | 12,703 | 13,459 | 14,152 | 14,840 | 15,576 | | Less RUC | $m | 2,272 | 2,414 | 2,415 | 2,419 | 2,423 | 2,427 | | Net FTC aggregate forecast | $m | 10,538 | 10,289 | 11,044 | 11,733 | 12,418 | 13,149 | | Eligible fuels (ML) | 2024-25 | 2025-26 | 2026-27 | 2027-28 | 2028-29 | 2029-30 | | --- | --- | --- | --- | --- | --- | --- | | Budget 2026-27 | 25,348 | 24,483 | 24,850 | 25,594 | 26,188 | 26,823 | OFFICIALS: Sensitive Legal Privilege Document 2 FOI 4352 | Assumption | Value | Source | | | | | | --- | --- | --- | --- | --- | --- | --- | | Excise reduction % | | 61% | Legislated reduction in excise rates | | | | | Price elasticity of demand | | | | | | | | s 22 | | | | | | | | | Diesel | 0 | Treasury assumption | | | | | Volumes adjustment | | | | Scenario net change | | | | s 22 | | | | s 22 | | | | | Diesel | 0.0% | Treasury assumption | Diesel | 0.0% | | | Excise reduction (volumes adjustment) | | | | | | | | s 22 | | | | | | | | | Diesel | 0.0% | Treasury assumption | | | | | Proportion of fuel eligible for FTCs | | | ATO FTC Diesel proportion | | | | | Diesel | | 66.4% | | | | | | s 22 | | | | | | | | | 2025-26 | 2026-27 | 2027-28 | 2028-29 | 2029-30 | Total | | s 22 | | | | | | | | | Gross fuel tax credits | 1,870 | 0 | 0 | 0 | 1,870 | | | RUC | -744 | 0 | 0 | 0 | -744 | | | Net fuel tax credits | 1,126 | 0 | 0 | 0 | 1,126 | | s 22 | | | | | | | | | 2025-26 | 2026-27 | 2027-28 | 2028-29 | 2029-30 | Total | | s 22 | | | | | | | | | Gross fuel tax credits | 1850 | 0 | 0 | 0 | 1,850 | | | RUC | -750 | 0 | 0 | 0 | -750 | | | Net fuel tax credits | 1150 | 0 | 0 | 0 | 1,150 | | s 22 | | | | | | | | | | | | | |  | Proportion of year impacted Diesel baseline volume adjustment NTC 2025-26 RUC revenue 25% 0% 2,974,728,186 3 Month RUC estimate Baseline On-road HV fuel use Rate RUC revenue Scenario On-road HV fuel use Rate RUC revenue Difference 2,295,314,958 32.4 $743,682,046 2,295,314,958 0 $0 -$744 # Estimated Fuel tax credits Source: Treasury analysis ## Assumptions Proportion of fuel eligible for FTCs on a gross basis Diesel 66.4% ## Baseline | Financial year | Month | Diesel | HA_Diesel | Total FTC | | --- | --- | --- | --- | --- | | 2025-26 | April | 896,330,342 | 4,050,635 | 900,380,978 | | 2025-26 | May | 981,505,015 | 3,373,795 | 984,878,809 | | 2025-26 | June | 1,182,464,008 | 3,322,870 | 1,185,786,878 | ## Scenario | Financial year | Month | Diesel | HA_Diesel | Total FTC | | --- | --- | --- | --- | --- | | 2025-26 | April | 350,465,164 | 1,579,283 | 352,044,447 | | 2025-26 | May | 383,768,461 | 1,440,389 | 385,208,850 | | 2025-26 | June | 462,343,427 | 1,709,110 | 464,052,537 | # Baseline and Scenario Clearances Source: Fuels forecasting model Date: MYEFO 2025-26 # Assumptions $ 22 # Baseline | Financial year | Month | $ 22 | Diesel | $ | | --- | --- | --- | --- | --- | | 2025-26 | April | $ 22 | 2,565,413,812 | $ 22 | | 2025-26 | May | $ 22 | 2,800,104,763 | $ 22 | | 2025-26 | June | $ 22 | 5,984,965,511 | $ 22 | $ 22 # Scenario | Financial year | Month | $ 22 | Diesel | $ | | --- | --- | --- | --- | --- | | 2025-26 | April | $ 22 | 2,565,413,812 | $ 22 | | 2025-26 | May | $ 22 | 2,800,104,763 | $ 22 | | 2025-26 | June | $ 22 | 5,984,965,511 | $ 22 | $ 22 # Baseline and Scenario Excise Rates Source: Fuels forecasting model Date: Budget 2026-27 # Assumptions Excise reduction percentage 62% # Baseline | Financial year | Month | £ 22 | Diesel | £ | | --- | --- | --- | --- | --- | | 2025-26 | April | £ 22 | 0.5262 | £ 22 | | 2025-26 | May | £ 22 | 0.5262 | £ 22 | | 2025-26 | June | £ 22 | 0.5262 | £ 22 | # Scenario | Financial year | Month | £ 22 | Diesel | £ | | --- | --- | --- | --- | --- | | 2025-26 | April | £ 22 | 0.2067 | £ 22 | | 2025-26 | May | £ 22 | 0.2067 | £ 22 | | 2025-26 | June | £ 22 | 0.2067 | £ 22 |