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SARS Final Diesel Refund provisions
- 24 July 2023
- Accounting
- South African Accounting Academy
The diesel tax break was announced by the finance minister during his February budget speech, to help food manufacturers deal with the load shedding crisis. The refund applies to qualifying diesel purchases from 1 April 2023.
The final provisions are included in Part 3 of Schedule No. 6 to the Customs and Excise Act, 1964.
This has introduced two big changes:
- The definition of ‘foodstuff’ has been altered to include beverages – previously, these manufacturers were excluded from benefitting from the tax break.
- SARS has also introduced additional requirements for companies to follow when applying, registering and claiming from the funds.
Under the refund, qualifying manufacturers will still be able to get 80% off the Road Accident Fund (RAF) levy in the diesel they use in the process of manufacturing foodstuff.
The scheme will apply retrospectively from 1 April 2023 up to and including 31 March 2025.
The following additional requirements have been added to the registration and application process:
- Persons wishing to participate in the scheme must register as refund user.
- The premises in which manufacturing will take place must be duly registered with SARS Customs, which application must include a detailed plan of the premises.
- Application for registration is to be made on Form DA 185 with Form DA 185.4A3 as an annexure.
- A refund claim must be made on Form DA 66 and submitted electronically or to the SARS office nearest to the manufacturing premises.
These steps add to an already onerous process to take advantage of the tax break, including the requirements to keep track of a host of documentary evidence to support any claim or refund.
The user must maintain complete records, books, accounts or other documents for a period of five years from the date of purchase, use, disposal or loss of such diesel or refund claim – whichever occurs last.
Documents must be readily available for inspection by SARS.
Click here to download the Gazetted Notice:
Relevance to Auditors, Independent Reviewers & Accountants:
- The Customs and Excise Act is yet another piece of legislation that your clients must comply with, and which you must assess compliance with. If they don’t comply with the relevant laws and regulations, you have certain reporting obligations in terms of NOCLAR (NOn-Compliance with Laws And Regulations) – this could include reporting to management, qualifying your audit opinion, reporting a Reportable Irregularity, etc.
- As an auditor, independent reviewer and accountant, you need to consider whether Manufacturers of foodstuffs have claimed their diesel refunds accurately.
- Tax practitioners play a critical role in bridging the gap between taxpayers and SARS. As legislation, regulations and tax law are continuously changing and evolving, it is of utmost importance for companies and tax practitioners to keep abreast of such changes in so that companies and taxpayers continue to meet their tax obligations.
Relevance to Your clients:
- An entity (company or close corporation) has a duty to comply with the Customs and Excise Act.
- Qualifying manufacturers, who want to claim the diesel refunds, have to be aware of the latest publications by SARS to continue to meet their tax obligations.
- Manufacturers of foodstuffs need to now how to claim their diesel refunds.
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