While driving on the R304 from Malmesbury to Stellenbosch I witness one of the most beautiful sites one could imagine. Thousands of hectares of open wheat fields, vineyards and of course Table Mountain in all its glory, showing off its beauty over the Cape.
But behind all this beauty there is one group of people that works day in and day out to make all this a possibility and secures South Africa’s food production. Of course, I am referring to our farmers. A very small portion of our population who historically contribute about 2.5% to our GDP, however, given its backward and forward linkages to the rest of the economy this figure is significantly higher.
Planting season is just around the corner, when the big machines are pulled out from their long sleep and started up for the long month of nonstop working. Seeing these monsters ploughing and planting the thousands of hectares of fields, are a sight to behold. Of course, what do these machines need to work? Thousands and thousands of litres of Diesel.
With our volatile fuel prices and our farmers’ direct dependence on fuel for their farming activities, thus directly influencing their ability to provide food security, government realized there should be a rebate to support this sector. I introduce to you: Diesel Rebates!
Whilst this only affects a very small portion of you directly, we are aware of many situations where an inadequate understanding and/or ineffective application of the rules has resulted in unnecessary costs that will ultimately have to be passed on via the food supply chain to consumers.
So if you are either directly or indirectly linked to this topic please read on carefully.
Diesel Rebates and how it works
The diesel refund calculation in respect of the farming sector, is 80% of the diesel consumption in litres, multiplied by the given SARS fuel levy.
Most farming enterprises will qualify to be registered for the Diesel Refund Scheme. The person carrying on the farming enterprise may therefore apply for registration for the Diesel Refund Scheme, provided the enterprise is registered for VAT. The Diesel Refund Scheme is currently administered through the VAT system, hence, the requirement that VAT registration is a pre-requisite for participation in the scheme. Once registered, the claim for a diesel refund will be made using the VAT201 return which is available on eFiling.
It is important that all the relevant documentation is kept relating to diesel purchases as well as the various logbook entries or other records which indicate the actual amounts of diesel drawn from stock for eligible and non-eligible use during the tax period. Any diesel refund amount which is found to have been incorrectly refunded will have to be paid back to SARS, together with any penalties and interest that are applicable.
What are the main requirements to consider to avoid incurring any of these penalties and interest?
Diesel Logbooks, no logbook, no claim!
The following requirements should be implemented to ensure the validity and accuracy of your Diesel claim/rebate.
- Only the diesel used in the primary farming activities may be included when calculating the rebate.
- Only the diesel used in activities which relate directly to the construction and maintenance of the farming activities may be included in the rebate calculation.
- Take note that the diesel used to transport casual labourers, may not be included when calculating the rebate.
Claim on usage, not purchases
The rebate is the refund of an excise tax, the claim should be calculated on the qualifying litres USED in farming activities.
- Logbooks should be kept per tank (located on the farming property) and for each vehicle that makes use of the bulk diesel.
- Each diesel tank should have a logbook depicting the details of any diesel removed from the tanks.
- This includes the date, vehicle details and the quantity. Full details of diesel purchases should also be captured, and must include at the minimum:
- the number and date of each invoice relating to such purchases or receipts;
- the quantities purchased or received;
- the sellers name and business address; and
- the date of purchase and receipt.
- The logbook per vehicle must include the following minimum details:
- date and quantity
- purpose for usage
- kilometers travelled
- full details with regards to any diesel supplied to contractors
Now when you see the sunset over any of the unbelievable landscapes of South Africa, remember the hard work our farmers are putting in. Like them, we are here to take your hand and assist where possible.
waufm and waucomply are ready to assist you with any of your financial management and compliance queries. In the process, we might just wau! you.