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September 10, 2020
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September 10, 2020

Logbooks for individuals and diesel rebates in farming

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Requirements for a valid logbook

Individuals

The 2020 tax season officially started on 1 September 2020 and individual taxpayers are required to file their income tax returns by the following dates:

Non-provisional taxpayers 1 September to 16 November 2020
Provisional taxpayers 1 September 2020 to 29 January 2021

Many taxpayers receive a travel allowance or the right of use of a vehicle from their employers which make them eligible for certain tax deductions.

[1]Taxpayers who wish to claim the cost of business travel must base their claim on the actual business kilometres travelled and are required to prove the business kilometres travelled to the satisfaction of the Commissioner, generally done in the form of a logbook.

To do so, recipients must keep accurate written records of their business travel in the form of a logbook. The minimum requirements for a valid logbook include the following information:

  • The odometer reading on the first day of the year of assessment.
  • The odometer reading on the last day of the year of assessment.
  • For all business travel –
    • the date of the travel;
    • the kilometres travelled; and
    • business travel details (place and reason for the trip).

A valid logbook is vital, as SARS will disallow all travel-related deductions if a logbook with the correct details cannot be provided when an income tax assessment is selected for verification.

Diesel rebates (in farming)

The claim for a diesel refund is made using the VAT201 return which is available via eFiling. A diesel refund claim will be offset against any VAT liability that is payable for the tax period concerned. Alternatively, the diesel refund claim will increase any VAT refund that is due to the vendor[2].

It is further vital that all the relevant documentation relating to diesel purchases are kept, as well as the various logbook entries or other records which indicate the actual amounts of diesel drawn from stock for eligible and non-eligible use during the tax period.

Schedule 6 of the Customs and Excise Act, no. 91 of 1964, Section 75, provides the legislation applicable to the diesel refund system. Logbooks should indicate a full audit trail of distillate fuel for which refunds are claimed, from its purchase to use.

The following data fields are required for a compliant logbook:

  • Opening and closing date.
  • Monthly opening litres of diesel in equipment.
  • Litres received from storage (Date, storage detail and quantity).
  • Equipment detail (Type, identification number, opening km/hours, closing km/hours, and total km/hours).
  • Monthly closing litres of diesel in equipment.
  • Purpose/Activity performed – Date, place, specific eligible activity performed, eligible litres, non-eligible activity performed, and non-eligible litres
  • Operator’s particulars

SARS may audit your claims for up to 5 years after they have been submitted. Any diesel refund amount which is found to have been incorrectly refunded (or cannot be substantiated by a valid logbook) will have to be paid back to SARS, together with any applicable penalties and interest.

Not keeping accurate logbooks can potentially result in substantial amounts owed to SARS. We invite you to contact us should you have any inquiries regarding the validity of your own logbooks or those of an entity that you are currently using. You can contact us on 021 840 1600 or tax@asl.co.za.

[1] SARS Interpretation note 14 (Issue 4)

[2] https://www.sars.gov.za/TaxTypes/VAT/Pages/Diesel-refunds-in-farming.aspx#:~:text=Refunds%20under%20the%20Diesel%20Refund,which%20is%20available%20on%20eFiling.