Despite SARS undertaking a review of the diesel refund administration and legislation in early 2020 and requesting/receiving comprehensive comments thereon from industry, the current system remains.
Not only that but judging from recent matters, SARS auditors up and down the coast are still auditing fishing vessel owners/operators on a strict interpretation of the rules. This is leading to assessments where SARS are claiming the repayment of large portions of refunds despite 90% of the diesel being used in commercial fishing activities.
From experience, the problems arise mainly from:
- the timing of the claims; and
- the form of the logbook (or lack thereof) used to record the diesel usage;
The rules are clear that only diesel “purchased and used in commercial fishing” may be claimed. However, as vessels don’t have fuel meters which accurately indicate the fuel level of tanks, a practice has developed that fuel purchased is simply claimed at the end of the vat period in which the purchase is made – at this point in many cases the fuel purchased has not actually been used (or at least only part of it has been used) – hence the audit query raised. The answer is to delay claims until it is clear that the fuel actually purchased has been used.
Unfortunately, there is no SARS approved diesel usage logbook for the fishing industry despite FishSA submitting a proposal to SARS. As a result, diesel users often use a “mishmash” of their fishing logbooks to record their fuel purchases, but often this does not break down the litres used per trip as required by SARS. Users are advised to determine a diesel usage rate of say litres per hour of steaming or per nautical mile, and then to apply that rate consistently to each trip.
Also of importance to note is that diesel used for trial runs, or in the process of repairs or moving to the repair yard, cannot be included in rebate claims. Likewise, diesel used outside of SA waters.
Owners/operators are urged to relook at the way they record and claim their diesel usage to ensure they do not fall foul of the rules governing the current diesel rebate system.