So, if you’re a farmer, the Customs and Excise Law allows you to claim a rebate in respect of diesel used in your farming activities. Note: the rebate is calculated on diesel used and not purchased (although some SARS documents cause confusion because they refer to diesel “purchases”). However, the law surrounding the diesel rebate is very burdensome and difficult. Briefly, it starts with saying that if you qualify as a user then you register with SARS and start claiming your rebate.
That’s the easy part.
Then comes the claim – which as you know, goes on the VAT return. But in the absence of any guidelines from SARS, are farmers obliged to guess how to calculate the rebate, and which documents to keep?
Here are a few tips that may help:
Probably the most contentious of all the rules is the logbook. And how. For every SARS auditor and every SARS office there is a different set of rules as to what comprises a valid logbook. Indeed SARS themselves have only ever produced a “draft” example of a logbook on their website. Since 2013. Logbooks are probably the basis of the diesel rebate system. SARS wants you to keep logbooks which contain a whole lot of columns and information. Important to know about logbooks is:
- They must be in writing but not hand written;
- They don’t have to “be dirty” (as per one SARS auditor) I guess this means they don’t have to show they have been dragged out of the dirt and information entered;
- They don’t have to be daily, but must be periodic;
- Can you claim for 2 trips or just 1? So if you deliver produce to the co-op are you allowed to claim diesel for the trip back to the farm when the truck is empty?
- The diesel audit
When you receive a “letter of audit” from SARS, make sure you understand what records SARS requires of you. Most important on this letter, is there must be contact details of the person carrying out the audit and which SARS office they’re operating from. And NOT details of the SARS call centre. SARS has a little habit of auditing your diesel for some 3 – 5 years. Ensure that you are sure of what they want. That way, if their letter is vague, you can phone or email the contact person. Even if SARS expects 10 000 pages of information, our experience has shown that SARS carries out an audit based on the information given. If the information is incomplete, you will receive an incomplete audit finding and a letter probably showing that you owe SARS!
The other important aspect in the diesel audit, and one SARS loves using is the Promotion of Administrative Justice Act. I want to point out that this Law effects your rights to administrative action that is lawful, reasonable and fair. But more about that later.
- The letter of demand
Is filled with some 9 pages of legal gobbledegook! Really. And unless you are a trained advocate, will you really understand what SARS is getting at? Should you receive a letter of demand, you must first understand the timing principles involved. You have 30 working days to appeal. If you’re late, you’re late and it’s doubtful if SARS will even listen to you after that. Similarly, though, SARS also has 30 days to receive your payment – they simply cannot issue a letter of demand and grab the money from your VAT return on the same day! A landmark judgement was given in Court in April this year, where the Court found that SARS had not followed the correct procedure in terms of the Tax Administration Act and had merely grabbed money from the vendor’s bank account. The Court found in the vendor’s favour. Should you receive a letter of demand regarding your diesel rebate, contact me immediately! There are very important steps to follow in terms of the law. If SARS grabs your money out of your next VAT rebate, within the 30 days of the letter of demand then also contact me immediately!
I am presenting training, in association with SA Cane Growers on 7 and 8 October on the KZN North Coast and would love to see you there! If you would like to attend, please reserve your seat now, by emailing Reception.Desk@sacanegrowers.co.za or phoning (031) 508 7200.