Sascha Astle - Specialised Tax Manager | PKF Port Elizabeth 

SARS has recently intensified its audits of diesel refunds. In some cases, SARS is even revisiting claims going back more than two years. Many vendors, especially farmers, have seen their diesel claims disallowed simply because the required supporting records, and particularly the diesel logbooks, are either incomplete or inadequately maintained.

To safeguard your diesel claims, it is crucial to understand the requirements and ensure that your records meet the legislative standards.

What a SARS-Compliant Logbook Must Include

1.    Storage logbooks for tanks must include:

•    Capacity
•    Location
•    Dates and quantities the tank has been filled
•    The supplier of the diesel
•    Dates and quantities diesel removed from the tank
•    Detailed reasons for the removal of diesel
•    Monthly opening and closing balances

2.    Usage Logbooks must include:

•    Diesel source (i.e. tank and location)
•    Date used
•    Daily quantity used (litres)
•    Daily unused quantity (litres)
•    Detailed description of the activities for which the diesel was used (specific qualifying activity)
•    Equipment identification (e.g., vehicle registration, machine serial number)
•    Equipment specifications (i.e. distance, duration, route, speed, rate)
•    Any notable observations supporting accurate measurement
•    Details of operator

Why the Logbook is Non-Negotiable

In recent court cases such as Sandbaken Boerdery (Pty) Ltd v Commissioner SARS, the judgement delivered by the court echoes the importance of accurate records and keeping of logbooks. 

Sandbaken Boerdery, a registered VAT vendor, conducts mixed farming activities on a number of farms and uses diesel in its farming operations. Sandbaken Boerdery claimed diesel refunds in the sum of R711 223.08 in respect of tax periods December 2018 to October 2020. The Commissioner disallowed the diesel claims. One of the primary areas on which the court had to decide was whether the record keeping of Sandbaken Boerdery, with specific reference to its logbooks for diesel usage, complied with the provisions of the Customs and Excise legislation.

The court concluded that Sandbaken Boerdery’s usage logbooks failed to comply with legislative requirements. The logbooks did not indicate a full audit trail of the distillate fuel claimed. This made it impossible to determine the correctness of the amount of eligible and non-eligible diesel usage. This was further aggravated by the fact that the details for describing the farming activities undertaken was generic and or in a summarised format. Descriptions such as “daily farming activities”, “livestock activities”, “farm construction” etc. is not sufficiently describing the farming activities undertaken. Usage Logbooks are considerably more detailed compared to standard travel logbooks.

Claims must be backed by concurrent, accurate records demonstrating diesel use in qualifying production activities. The logbook must account for every litre of distillate fuel used. Without a fully compliant logbook, vendors risk their claims being disallowed.

SARS’s heightened enforcement, backed by legal precedent, means meticulous record keeping is not optional, it is a requirement. An accurate and well documented logbook system is the best defence against SARS audits. Should you be unsure of the accuracy of logbooks kept, contact your nearest PKF office for guidance.

SARS Diesel Usage Logbook Template