2026 update covering the 100 percent rule registration changes and record keeping
The main change is already effective: from 1 April 2026, qualifying on-land primary-sector users may calculate the diesel refund on 100% of eligible diesel used in qualifying activities, instead of the previous 80%. The change does not make all diesel purchases refundable. Eligibility, actual use and supporting records remain decisive.
The current claim process has not yet changed in practice. SARS’s website still states that diesel refund claims are submitted through the VAT201 on eFiling. SARS has announced a phased move to a dedicated Diesel Refund Registration System, but its latest communication asks users to prepare for registration and indicates that further detail will follow.
What changed in 2026
| Area | Previous position | Current position |
|---|---|---|
| Eligible-use percentage | 80% of eligible diesel used for qualifying on-land activities. | 100% of eligible diesel used for qualifying on-land activities from 1 April 2026. |
| Claim channel | Diesel refund claimed through the VAT201 on eFiling. | Still reflected by SARS as a VAT201 claim at the date of this update. |
| Registration | Diesel refund registration linked to the VAT profile. | SARS is moving to a dedicated eFiling registration system through a phased implementation. |
| Seller relationships | Supported mainly by invoices and existing records. | The future system will require electronic relationships between registered diesel users and diesel sellers. |
The 100 percent adjustment
The amended rule applies to on-land primary-sector beneficiaries in farming, forestry and mining. For farming operations, the refund calculation may now include 100% of the litres that are both eligible and used in qualifying farming activities. The amended percentage applies from 1 April 2026 and was reflected from the April 2026 VAT return submitted in May 2026.
It remains a use-based claim. A taxpayer must first identify the diesel actually consumed in qualifying activities. Diesel purchased but still held in a tank, used privately, used for a non-qualifying activity, or not supported by an adequate audit trail cannot simply be included because the percentage increased to 100%.
Simple example
| Calculation | Old rule | From 1 April 2026 |
|---|---|---|
| Diesel purchased during the period | 10 000 litres | 10 000 litres |
| Diesel proved as eligible qualifying use | 8 000 litres | 8 000 litres |
| Litres used for the refund calculation | 6 400 litres | 8 000 litres |
The monetary refund remains the qualifying litres multiplied by the applicable refund rate per litre for the relevant period.
The announced registration process
SARS is modernising diesel refund registration separately from the VAT-linked model. The announced end-state is a dedicated Diesel Refund Registration System on eFiling with a Diesel User Dashboard. Implementation is phased, and SARS has indicated that further operational detail will be communicated.
- Existing diesel refund users will have to register on the new solution when SARS activates the applicable process. Registration will not be automatic.
- Diesel sellers will also have to register so that users can create and manage electronic seller relationships.
- The dashboard is intended to show applications, registrations and seller relationships.
- Users will need a valid and confirmed SARS legal-entity profile and information about their qualifying business activities.
Current position at 21 September 2026. The normal claim process remains through the VAT201. Existing users should prepare their profiles and supplier information, but should not assume that the VAT201 process has already been replaced until SARS issues and activates the relevant implementation steps.
What has not changed
- Only diesel used in qualifying own primary production activities may be included.
- The claim is based on litres used, not merely litres purchased.
- Eligible and non-eligible use must be distinguished and supported.
- The taxpayer must maintain a full audit trail from purchase and receipt, through storage and dispensing, to the final vehicle, machine and activity.
- SARS may verify the claim and recover an incorrect refund together with applicable penalties and interest.
- Claims must be submitted within two years from the diesel purchase date, and relevant records must generally be retained for five years from use, disposal or the refund return, whichever is later.
Practical record keeping for farming operations
A defensible claim should reconcile every litre from purchase to final use. A fuel invoice on its own proves a purchase, but it does not prove qualifying consumption. The records should work together as one audit trail.
Purchase and receipt records
- supplier name and business address
- invoice number and invoice date
- date received and quantity received
- delivery point or tank into which the diesel was received
Tank and dispensing records
- a separate record for each bulk tank
- opening balance, receipts, litres dispensed and closing balance
- date of each issue and the person responsible for dispensing
- the vehicle, machine or diesel cart receiving the fuel
Vehicle machine and activity records
- date and litres received
- vehicle or machine description, code and registration number where applicable
- specific purpose and farming activity, with enough detail to assess eligibility
- kilometres, hours or another suitable usage measure where relevant
- separate details for fuel supplied to contractors or moved through diesel carts
Example of a useful dispensing record
| Date | Litres | Asset | Registration or code | Purpose and activity | Eligible |
|---|---|---|---|---|---|
| 12 Aug | 90 | Tractor JD1 | ABC456FS | Ploughing Block 4 vineyard | Yes |
| 14 Aug | 200 | Diesel cart DC1 | DEF789FS | Transfer to North Farm tank | Transfer |
| 16 Aug | 65 | Tractor MF3 | GHI192FS | Planting Block 2 vineyard | Yes |
| 22 Aug | 45 | 4×4 FD1 | MNO123FS | Private weekend travel | No |
Descriptions such as ‘farm work’ or ‘general use’ are too vague. Identify the actual activity, location or production purpose.
Lessons from the court cases
The Mbali Coal and Canyon Resources judgments remain relevant to farming claims because they reinforce the same evidentiary principle: the taxpayer must prove which diesel was used for eligible activities. Inadequate descriptions, gaps between purchases and dispensing records, and an inability to separate eligible from non-eligible use may result in the claim being disallowed.
The increase from 80% to 100% does not relax this burden of proof. It increases the litres that may enter the calculation after qualifying use has been established.
Action checklist for existing farmer claimants
- Continue submitting diesel refund claims through the VAT201 until SARS activates and communicates the replacement claim process.
- Apply 100% only to eligible diesel used in qualifying on-land farming activities from 1 April 2026.
- Review the SARS legal-entity profile and confirm that registered details and eFiling access are current.
- Compile an up-to-date list of diesel suppliers and verify their legal names and registration details.
- Reconcile invoices, tank movements, dispensing logs and vehicle or machine logs for every VAT period.
- Use specific activity descriptions and record non-eligible usage separately.
- Monitor SARS communications for the registration opening date, user guides and transition deadlines.
For assistance with reviewing diesel records or preparing a claim, connect with Daniël Malan at dmalan@wauko.com or on 021 819 7803.
