Diesel Rebate Claims: By Andrew Hancock

Diesel rebates are legislated and available for the benefit they were designed for. Once you have a secure system of logging inclusive of all compliant elements, there should be no need to fear a SARS audit.

 

Rebates are given on diesel used in primary operations. Primary operations are specifically addressed in the relevant legislation.

 

In simple terms fuel used must be logged, detailing how much, when, where and what for. Those key records will support or negate your claim.

 

Many users make claims based on their purchases. This is incorrect. Rebates are given on fuel used and it is for this reason that great emphasis is placed on asset logging record. As a result, the activities performed become crucial to eligibility.

 

Often times SARS will dispute, primary and secondary activities and raise assessments accordingly, even though the logging record in its criteria is compliant.

 

I can assist operators to differentiate  between eligible and non-eligible activities, what and how to record.

 

When SARS engages you to audit your diesel usage record, it is important to follow time lines and procedures as required. Entrenched in this legislation is the empowerment of rights for both SARS, as the revenue collector, and yourself, as the taxpayer.

 

When SARS intends, or in the event, reverses previous claims it is crucial to analyse what criteria they are basing their intentions on. Legal mechanisms are open and available to lodge legitimate disputes throughout the entire audit process. Knowing how and when to do this is important to the success of a dispute. An examination and reconciliation of your logging and SARS findings will determine what routes to follow.

 

It all starts with the detail required in the logging record and while this can be perceived as an administrative burden, the reality is that once the detail is identified, the system can be streamlined into your daily operations. Invariably a tracking system already exists of necessity to the operators accounting needs. It’s a matter of tweaking and enhancing.

 

Larger operations will require a more structured approach owing to the volumes of diesel used, variety of activities performed, and number of assets being tracked.

 

Smaller operations can slot a logging mechanism into daily activities.

 

In all cases original records are foundational and are the basis of your audit trail.

 

Changing legislation:

Since 2017, the legislation governing the diesel rebate process has been under review and several sessions have been had since then to engage stakeholders for input. Recently (October/November 2021) a final round of sessions has been held and an overview of proposed changes have been explored.

 

In brief:

The diesel rebate administration is to move to a standalone system, separate from the Vat administration.

Address the concept of wet contractors and joint ventures.

Provide clarity on the definitions of primary production for the respective industries and qualifying activities.

Improve registration and record keeping requirements, while providing logbook templates, simplified alternate logbooks and options for advanced technologies.

The need for diesel refund users to also be registered for Vat will fall away.

Electronic profiles are to be created under the Excise administration and will provide registration and return submission separate for the Vat mechanism.

This mechanism will be live, most likely on the e-filing platform and will form a crucial data base for the user and for SARS.

 

Re-registration under this new mechanism will be a necessity to continue to partake in the rebate system. These profiles will be interactive and will maintain an updated record of relevant data:

• Sector activity
• Location
• Storage facilities
• Assets
• Dedicated and other
• Relationships within the operations.

 

Storage and usage logging will remain key to diesel rebate compliance o In this regard, industry specific examples of acceptable standard and simplified logbook formats are yet be developed through consultation to reflect current needs and technologies.

 

For agriculture:

• Simplified logbooks for specified diesel powered assets dedicated to perform predominantly qualifying agricultural activities.
• Qualifying usage in listed equipment can be recorded in simplified logs.
• Fuel used in assets not listed will need logging in the standard logbook.

 

For mining on land:

• No usage logbooks for underground assets o Where fuel is dispensed from surface to subsurface storage facilities not to be returned to the surface again and all equipment powered by this fuel are located permanently underground. This usage to be evidenced by dispensing entries in the subsurface storage logs.