The refund is limited to 80% of the Road Accident Fund (RAF) levy.
Requirements for eligibility
To be eligible for a refund, a taxpayer must satisfy the following requirements:
- manufacture of foodstuffs (products and preparations for human consumption, therefore, products for animal consumption are not included)
- from manufacturing premises (definition below)
- using electricity generated from diesel used in stationary, fixed, electric power generators. Mobile portable electric power generators are excluded.
Definition of manufacture
Manufacture means the execution of operations at a manufacturing facility that result in the production of foodstuffs for profit, which includes, but is not limited to the following activities:
- Slaughtering of animals in an abattoir
- mixing, forming, or producing foodstuffs
- processing, converting, or extracting foodstuffs
- handling, storing, or preserving foodstuffs
- conveying or transferring foodstuffs
- packing or measuring off foodstuffs electricity generation for such manufacture.
It should be noted that any products and preparation for making of any beverages classifiable under Schedule No1, Part 7, section A and goods under Chapters 5, 6, 13,14 and 22 to 99 are excluded.
All processes which qualify for the current diesel refund system are also excluded i.e., you cannot claim the same diesel usage twice.
Manufacturing premises
The diesel refund is limited to diesel used at the manufacturing premises where the industrial operations for the manufacture of foodstuffs are performed. Excluded from the definition is business premises at which:
- the publicly accessible portion of the trading area for wholesale or retail sales outlet activities comprises more than 10 per cent of the total floor surface of the business premises
- only the wholesale or retail distribution or sales of goods occur.
Record keeping requirements.
- Logbooks should be kept. Logbooks are systematic, written records that are regularly kept documenting all activities relating the eligibility of refund claims.
- A complete audit trail of the diesel for which refunds are requested must be reflected in the logbooks.
- Receipt, storage, removal, disposal, and loss of diesel must be recorded in the storage logbooks.
- Usage logbooks must include information about the source and use of diesel expended for manufacturing or other purposes.
All records, books, accounts, or any other documents used to substantiate the refund claim must be retained for a minimum of five (5) years from the date of purchase, use, disposal or loss of the diesel or refund claim, whichever occurs last.
Registration
The taxpayer is required to register as a ‘refund user’ and to also register each of its manufacturing premises using form DA 185 and annexure DA 185.4A3. The registration will open on 26 September 2023 via the SARS Online Query System (SAQS).
The refund user must be a registered Value-Added Tax (VAT) vendor.
Even though the registration only opens later this month, the registration will be approved from 01 April 2023, which will be the date the user becomes eligible for claiming refunds.
Documents required for the application:
- Completed DA185 (obtainable form the SARS website)
- Document confirming banking details of applicant
- Original or certified copy of an account that can confirm the physical address (usually a municipal account or cell phone/telephone account)
- If the entity is a juristic person (trust/company), a certified copy of the founding documents
- Certified copies of the identity (ID) documents (if the applicant is a natural person, and all the directors/trustees)
- Detailed floor plan according to scale.
Ongoing compliance
Claims must be submitted using form DA 66 together with all necessary supporting documents (specified on the schedule). The submission should be done manually at the closest excise office. If the registered entity has different sites (branches), the submission of each site should be done at their closest excise branch. The branches are still to be published by SARS.
Contact your local Moore firm
here.