Diesel refunds in farming

How do I access the Diesel Refund Scheme?

The diesel refund is governed by the Customs and Excise Act, but is implemented through the VAT administrative system, which requires a person to be registered for VAT.

Qualifying entities that carries on eligible activities and that are registered for VAT purposes, may apply for registration for the diesel refund. Farming is a qualifying activity under the Diesel Refund Scheme and most farming enterprises will qualify to register for the Diesel Refund Scheme. The person carrying on a farming enterprise must apply for registration for the Diesel Refund Scheme.

The Diesel Refund Scheme is currently administered through the VAT system, hence, the requirement that VAT registration is a pre-requisite for participation in the scheme.

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. Note that these registrations still depend on whether the other remaining requirements for VAT registration and the Diesel Refund Scheme are complied with. 

How do I claim for a diesel refund?

The diesel refunds under the Diesel Refund Scheme is processed by utilising the VAT administrative system.

The claim for a diesel refund will be made using the VAT 201 return, which is available on eFiling. 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 obtained and retained 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.

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