What was once introduced as a financial lifeline for farmers has become a major headache—and in some cases, a costly trap.
The diesel refund scheme, launched in 2000, was designed to lighten the fuel tax load on primary producers like farmers, miners, foresters, and fishers. But today, many South African farmers say it’s anything but helpful.
“The scheme was meant to be a lifeline,” says Mona Appalsamy, senior associate at Shepstone & Wylie Attorneys. “But now, it feels more like a compliance nightmare than actual relief.”
Under the scheme—governed by the Customs and Excise Act (No. 91 of 1964) and managed through the VAT system—farmers can reclaim some of the diesel taxes when the fuel is used for qualifying agricultural activities. Sounds simple enough, right?
Not quite.
The Devil is in the Paperwork
To access the refund, farmers must provide bulletproof records. This means:
- Proof of diesel purchase and payment
- Clear documentation of how and where the diesel was used
- A full, traceable log from tank to tractor
And here’s the catch: even small record-keeping mistakes can derail the entire claim.
“Record-keeping is the Achilles’ heel of most refund applications,” Appalsamy explains. “SARS [South African Revenue Service] often rejects claims over minor administrative slips.”
The consequences aren’t just lost refunds—they can also include steep penalties.
When the Courts Back SARS
Several court rulings have made it clear: when it comes to compliance, there is zero tolerance.
In Sandbaken Boerdery vs Commissioner for SARS (Jan 2025), a mixed farming operation had its diesel refund claim denied because of incomplete logbooks. The court sided with SARS, ruling that if the usage can’t be proven, the refund can’t be granted.
“There is no room for assumptions or estimates,” says Appalsamy. “The courts want full, precise compliance.”
The Naudé vs SARS (Feb 2025) case took it even further. The refund was rejected because the diesel wasn’t bought under the applicant’s name, and the logs didn’t specify what tasks the diesel was used for.
Similarly, in Umbhaba Estates vs SARS (June 2021), the court ruled that refund logs must clearly track diesel from purchase to final use, forming a complete audit trail.
A Missed Opportunity for Many
Up to 80% of a farmer’s diesel usage can qualify for a refund. For a large operation, that could mean savings worth hundreds of thousands of rands per year. But these savings disappear if just one compliance box isn’t ticked.
So how can farmers stay on the right side of the law?
Appalsamy offers a simple checklist:
- Buy diesel in your farm’s name
- Keep detailed, accurate logs showing how each litre is used
- Ensure diesel is tracked from purchase to final use
- Align your records with the draft logbook template published by SARS
“Farmers need to treat record-keeping with the same care they give to planting or harvesting,” she says. “It’s better to prepare now than to fight SARS later.”
The Bottom Line
The diesel refund scheme still holds value, but only for farmers who treat paperwork as seriously as production. In today’s compliance-heavy environment, clear, complete, and consistent record-keeping is non-negotiable.
