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February : Invitation to meeting to discuss proposed amendments to diesel rebate regulations

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23 February, 2017

Invitation to meeting to discuss proposed amendments to diesel rebate regulations

Please see below for your information a media release issued jointly by the Treasury and SARS regarding proposed amendments to the diesel rebate regulations together with a Discussion Document  for public comments thereon.  Such comments have to be lodged by 15th May 2017.  FSA will be making a submission.

Some of the key points related to forestry operations are as follows:

Qualifying primary production activities rather than users

  • An indicative list of the type and nature of qualifying activities and use by primary producers is provided in the discussion paper and this will be finalised through the public comment consultative process.
  • The list still excludes the transportation of bark as it is not regarded as a "forest product".

Inclusion of contractors

  • The inclusion of contractors is proposed to allow small-scale growers and new and new entrants who lack the necessary funding or experience to benefit from the rebate system.

Linking qualifying activities to physical location

  • The need to link the qualifying activities to a physical location has also been identified, which will enable easier definition of primary activities and monitoring of diesel use to prevent double claims and help curb the abuse of the system which, unfortunately, is a regular occurrence.
  • The proposed exclusion of all off-site transport and any processing activities, as well as stricter registration and enforcement measures, would also significantly curb the potential for abuse. The current 80:20 percentage allocation to determine qualifying refunds in farming, forestry and mining on land will therefore fall away.

Administrative enforcement and taxpayer compliance Audits

  • These will be based on risk profiling of diesel refund beneficiaries, while enforcement will continue to rely on taxpayer compliance with logbook obligations.
  • Beneficiaries will be expected to update and maintain their diesel refund registration profiles electronically to validate their claims. Claims outside the scope of the beneficiary's registration profile will be denied.
  • Diesel refunds will only be allowed in respect of diesel dispensed from storage facilities formally on record with SARS to diesel-powered equipment and vehicles also formally on record with SARS. In addition to logbooks (a standard format per sector is proposed), claimants will be obliged to maintain proper service and repair records for such machinery and vehicles to prevent ghost claims.


Standalone Diesel Refund Administration System

  • A standalone diesel refund administration is proposed separate from the VAT system - implementation planned in 2018.
  • The new system will be phased in through the initial confirmation of current diesel refund registrants followed by the re-registration of all beneficiaries anew over time.

Although some of the proposals are to be welcomed, there are still many concerns that we have previously raised with SARS but which have not been addressed.  It is thus my intention to hold a meeting of all those interesting in giving their input during March in order to assist us in drafting our submission.  I shall send out alternate dates once I have received a list of those wishing to attend the meeting. 

Should you wish to attend this proposed meeting,  please inform Judy Dowsett, our PMB Office Manager on judy@forestrysouthafrica.co.za.

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