SARS Intensifies Diesel Refund Audits: Why a Compliant Logbook is Essential
SARS has stepped up its scrutiny of diesel refund claims, with audits now extending to claims made more than two years ago. Many vendors, particularly farmers, are finding their claims rejected due to incomplete or poorly maintained supporting records — most notably, diesel logbooks.
To protect your diesel refund claims, it is essential to understand what SARS requires and to ensure that your documentation fully complies with legislative standards.
What a SARS-Compliant Logbook Must Contain
1. Storage Logbooks for Diesel Tanks
A compliant storage logbook should include:
- Tank capacity
- Location of the tank
- Dates and quantities of diesel received
- Supplier details
- Dates and quantities of diesel issued from the tank
- Detailed reasons for each removal of diesel
- Opening and closing balances for each month
2. Usage Logbooks
A compliant usage logbook should record:
- Source of diesel (tank and location)
- Date of use
- Daily quantity of diesel used (litres)
- Daily unused quantity (litres)
- Detailed description of the specific qualifying activity for which the diesel was used
- Equipment identification (e.g., vehicle registration or machine serial number)
- Equipment specifications (e.g., distance, duration, route, speed, rate)
- Notable observations supporting accurate measurement
- Operator details
Why Logbooks Are Non-Negotiable
Recent case law highlights the risks of inadequate record keeping. In Sandbaken Boerdery (Pty) Ltd v Commissioner for SARS, the court stressed the importance of detailed logbooks.
Sandbaken Boerdery, a registered VAT vendor engaged in mixed farming, claimed diesel refunds amounting to R711,223.08 for the period December 2018 to October 2020. SARS disallowed these claims, citing deficiencies in the farm’s diesel usage records.
The court found that Sandbaken Boerdery’s logbooks did not comply with the Customs and Excise Act. Specifically, the records failed to provide a complete audit trail for the diesel claimed. Generic descriptions such as “daily farming activities,” “livestock activities,” or “farm construction” were deemed insufficient. The court emphasized that usage logbooks must be far more detailed than standard travel logbooks to substantiate claims.
The Bottom Line
Every litre of diesel claimed must be supported by accurate, concurrent records showing use in qualifying production activities. Without a compliant logbook, claims are highly likely to be rejected.
With SARS tightening enforcement and courts backing these standards, meticulous record keeping is not just best practice — it is a legal requirement. The most effective safeguard against a SARS audit is a well-maintained, fully documented logbook system.
If you are uncertain whether your current records meet the required standard, we recommend seeking professional advice. Contact us to schedule an appointment and ensure your logbooks are fully compliant.