The ATO Has a Fuel Response Payment Plan. Here's How It Works

The ATO is offering three-year payment plans to businesses whose cash flow has been hit by rising fuel costs. No upfront payment. Potential remission of general interest charges. And the window closes on 30 June.

Since March, diesel prices have pushed past $2.40 a litre in most capital cities. The federal government halved the fuel excise in April and the Fair Work Commission ordered supply chain fuel cost recovery later that month. But for businesses that were already stretched, the damage to cash flow happened before any of that relief arrived. Tax obligations kept falling due while margins shrank.

What the ATO is offering

The fuel response payment plan is a temporary measure, separate from the ATO's standard payment arrangements. It is available to any ABN holder who can demonstrate that higher fuel costs, either directly or through freight and supply chain increases, have reduced their capacity to pay tax debts on time.

The terms are more generous than a standard ATO payment plan. There is no upfront payment required. Repayments are spread across up to 36 monthly instalments. And if the business engages proactively and makes its first three payments on time, the ATO will consider remitting the General Interest Charge (GIC) that accrued from the date of application through that initial period.

The plan covers existing tax debts and new debts that have built up since fuel prices spiked. Eligibility requires current lodgements, so any outstanding BAS or tax returns need to be filed first.

Who this is actually for

The businesses feeling this most are the ones with high fuel exposure and low pricing power. Transport operators, tradies running diesel utes across multiple sites, agricultural producers, and regional businesses where every delivery costs more. These are businesses that absorbed weeks of higher costs before passing any of it on, and many still haven't.

But it also applies to businesses hit indirectly. If your supplier has increased prices because of freight costs, and that has squeezed your margins to the point where meeting a BAS payment is a problem, the ATO considers that eligible.

What to do before 30 June

The payment plan is the headline, but it is not the first thing to act on.

Start with your PAYG instalments. If fuel costs have cut into your profit this year, your quarterly PAYG instalments are almost certainly overstating your actual tax liability. They are calculated on last year's income, not this year's reality. You can vary them through the ATO's online portal right now. No application, no phone call. This frees up cash immediately and prevents you from lending the ATO money you do not owe yet.

Then look at your BAS obligations. If you have been stretching to cover quarterly GST and PAYG, the fuel response plan lets you stop robbing one obligation to service another. Work out which debts should go onto the three-year plan and which ones you can keep current. The GIC remission only applies if you engage before the deadline, so waiting until you miss a payment costs you the concession.

Finally, pressure-test your cost base beyond June 30. The fuel excise cut expires. The ATO's fuel response window closes. If your business model assumes diesel stays below $2.00 a litre, you need to know that now, not in July. Run the numbers at $2.20. See which costs are genuinely fixed and which ones you have room to renegotiate. Supplier contracts, delivery schedules, route planning, fleet composition. The businesses that come out of this in good shape will be the ones that treated the crisis as a reason to audit their cost structure, not just a reason to defer a tax bill.

This article is general information only and is not financial advice.