Although some up-and-coming farmers may not know it, South African farmers can claim back up to R2.79 per eligible litre of the diesel that they purchase and utilise for farming purposes.
The R 2.79 per eligible litre is made up partially from the fuel levy together with the Road Accident Fund levy, which together forms part of the purchase price of a litre of diesel, says Victor Terblanche, director of VATIT South Africa (VATIT SA).
Farming falls under one of the primary production sectors in the country and is therefore eligible for claiming diesel rebates. Terblance indicates that government’s objective is to assist farmers by partially exempting them from paying the fuel levy and the Road Accident Fund levy which is included in the price of a litre of diesel. Therefore they receive a refund of R2,79 refund.
Seeing that farmers generally consume diesel on their farms and not on public roads, it makes sense that some relief should be provided for the portion which is paid to the Road Accident Fund levy, he says.
According to Terblanche this is an exclusive incentive for on-land consumption of diesel, provided for by the Diesel Refund Scheme, which is limited to qualifying diesel users in farming, forestry and mining industries. Similar refunds are also provided for qualifying users in the off-shore, Harbour vessel, Rail and Electricity supply industries.
“(Some of the) primary production activities listed for farming, for example, include activities like growing crops and harvesting and storing crops on the farming property,” he says. This includes the breeding of fish in dams and the farming of oysters, the breeding and caring for animals and reptiles and the breeding and caring for race and show horses and the transportation thereof.
Terblanche indicates that farmers can currently receive back a nett amount of R2,79 for every eligible litre of diesel they purchase and utilise on agricultural land.
“For example, a maize farmer would use his tractor exclusively on his land and purely for the purpose of his farming activity and basically that would qualify him to claim back approximately R2,79 per litre for such use,” he says.
However, there are a number of substantive requirements that must be met before a farmer qualifies for refunds in terms of the scheme. The first qualifying requirement is that the farmer must be registered as a VAT vendor in terms of the Value-Added Tax Act.
According to the South African Revenue Service (SARS), the Diesel Refund Scheme is currently administered through the VAT system, hence, VAT registration is a pre-requisite for participating in the scheme.
Secondly if the person is already registered for VAT as a vendor, then registration for the Diesel Refund Scheme can be made by completing and submitting a VAT 101D form.
If the person is not registered for VAT as a vendor, then registration for VAT as a vendor and registration for the Diesel Refund Scheme can be made simultaneously by completing and submitting a VAT 101 and VAT 101D forms, respectively.
It is important to note that these registrations will still depend on whether the other remaining requirements for VAT registration and the Diesel Refund Scheme are complied with, Terblanche emphasises.
How do I claim for a diesel refund?
Refunds under the Diesel Refund Scheme are merely processed by utilising the VAT administrative system. The concession is actually granted to qualifying purchasers under the Customs and Excise Act.
Once registered, the claim for a diesel refund will be made using the VAT201 return which is available on eFiling on the SARS website. A diesel refund claim will be offset against any VAT liability that is payable for the tax period concerned, or alternatively, the diesel refund claim will increase any VAT refund that is due to the vendor.
It is important that all the relevant documentation is kept relating to diesel purchases as well as the various log book 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.
Farmers can additionally currently claim R5,62 per litre on offshore activities such as commercial fishing, R3,85 per litre on electricity generation plants and R2,07 per litre on rail and harbour services.