Fuel Excise Relief July 2026: Does It Change the Novated Lease Equation?
The government is cutting fuel excise by 16c/litre through August 2026. Here's what that actually means if you're considering a novated lease. Read on.
The Albanese Government introduced the Treasury Laws Amendment (Fuel Excise Relief No. 2) Bill 2026 on 22 June 2026, cutting fuel excise on petrol and diesel by 16 cents per litre from 1 July to 2 August 2026. According to the Treasury Ministers release [Source 1], the measure is designed to ease cost-of-living pressure on motorists and businesses, and a matching reduction to the Heavy Vehicle Road User Charge is included to help freight operators.
This is a one-month extension of an earlier cut — not a permanent structural change to fuel pricing. Once 2 August passes, excise returns to its standard rate unless further legislation is passed. That context matters a lot if you're trying to decide whether to stick with a petrol vehicle or move to an EV on a novated lease.
What this means for novated lease customers
Short-term fuel relief is welcome, but it doesn't rewrite the underlying maths of running a petrol or diesel vehicle. A novated lease on an eligible electric vehicle still sits outside the FBT net under the current exemption — a structural, ongoing tax advantage that a temporary 16c/litre excise cut simply can't replicate.
If you're currently driving a petrol car under a novated lease, you'll see a modest reduction in your fuel running costs during July. That's a real, if short-lived, benefit — and because fuel is a claimable running cost inside your novated lease budget, any pump savings flow directly back to you.
For employees sitting on the fence between an ICE vehicle and an EV, this excise cut is essentially noise. The structural case for an FBT-exempt EV on a novated lease is based on your ongoing income tax position, not the weekly servo price. One month of cheaper petrol doesn't close that gap. If anything, it's a reminder of how exposed petrol vehicle running costs are to policy decisions that can go either way.
Common questions
Does the fuel excise cut affect my existing novated lease repayments?
Your repayments stay the same — the excise cut reduces what you actually pay at the pump during July, which means your fuel budget inside the lease may stretch a little further for that month. Any unspent fuel budget is reconciled at your lease anniversary or end of FBT year depending on your arrangement.
Does cheaper petrol make an EV novated lease less attractive?
Not in any meaningful way. A temporary 16c/litre cut lasts one month. The FBT exemption on eligible EVs is a standing legislative benefit that applies across the full lease term. The long-term running cost advantage of an EV on a novated lease isn't driven by petrol prices.
Does this excise relief apply to hydrogen or other alternative fuel vehicles?
The legislation targets petrol and diesel excise specifically, as outlined in the Treasury Ministers release [Source 1]. Eligible battery EVs and plug-in hybrids under a novated lease don't use petrol or diesel, so this measure is largely irrelevant to their running costs.
When does the fuel excise cut end?
According to the Treasury Ministers release [Source 1], the cut runs from 1 July to 2 August 2026. Unless further legislation extends it, standard excise rates resume from 3 August 2026.
Can millarX help me compare a petrol vehicle vs an EV on a novated lease?
Yes — that's exactly what we do. millarX is ACL-licensed and AFCA-registered, and we'll walk you through both options using your actual salary and tax position, not marketing averages.