By Lloyd Phillips

Farmers have been advised to brush up on their knowledge regarding keeping records of their on-farm diesel use.

This is because numerous farming businesses have been fined hundreds of thousands of rand by SARS auditors this year for failing to keep proper records. KwaZulu-Natal Midlands farmer JJ van de Velde is one. He was fined R147 000 for not keeping a diesel-use logbook. While acknowledging that he is at fault for this, Van de Velde feels aggrieved that the SARS auditor was unwilling to go through alternative farm records indicating diesel use.

“Tractors can’t run on air. But because I didn’t keep a diesel logbook they gave me this huge fine,” he said. “There was no leniency or an opportunity given to me to implement what they want. I’ve put in an appeal against the fine, but SARS will reply when they feel like it. In the meantime I’m paying about 10% interest on the fine.” Van de Velde added that he’s suspicious because it appears that the auditors work on a commission-based system and so it would be in their interests to issue fines instead of educating farmers.

Grey areas
Dawie Maree, portfolio manager: commercial for Agri SA, said that, while Schedule 6 (Part 3) of the Customs and Excise Act No 91 of 1964 is clear on what farmers have to do to claim their diesel rebate, there are still some grey areas that need to be cleared up with SARS. “There have been farmers who have kept logbooks, but were still fined because their auditors said that the logbooks’ format was wrong. But when farmers ask what the format should be the auditors answer that they don’t know,” said Maree.

He added that Agri SA is arranging a meeting with SARS to resolve the problems. Sandy la Marque, CEO of the KZN Agricultural Union, said the union has the requirements posted on its website, “but there are some principles that we’re concerned about and want to have addressed.” Maree said it’s also the responsibility of farm business accountants to keep track of diesel rebate requirements and to advise farmers on how to go about properly implementing these. – Lloyd Phillips
See SARS response below.

SARS response – Diesel refund

“The purpose of the diesel refund system is to encourage primary production in South Africa by providing a refund on the fuel and RAF levies charged on diesel and biodiesel. As part of its mandate, SARS has been conducting audits across all industries to ascertain if they are complying with the relevant Diesel Rebate requirements.

‘‘With regard to documentation, under section 75 of the Customs & Excise Act, No 91 of 1964, a user who was granted a refund must furnish SARS with a declaration in such form and supported by such documents as prescribed in the notes. A user must complete and keep such books, accounts and documents and furnish to SARS at such times such particulars or other particulars as may be prescribed in the notes.

“Documentation must show how the fuel purchased was used. The onus to prove compliance with the act is on the user, which means that by failing or refusing to keep and/or produce the requisite documentation, the user would only prejudice themselves.
“SARS published a Diesel/Biodiesel Refund Reference Guide for users regarding the relevant legislation and practical issues.’’

For more info visit: www.sars.gov.za/tools/documents