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Is a diesel rebate taxable?

02 March 2015   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

Q: A farmer receives a diesel rebate on submission of his VAT201 return. Is the diesel rebate taxable?

A:The diesel refund scheme allows a participant to the scheme to claim a refund of certain amounts included in the normal diesel price as incurred by the participant. As the amounts are not excluded at point of supply but refunded at a later point in time, it is our view that when the person captures the diesel purchase in its records the full amount is included as a deduction and therefore on refund of the amount a recoupment in terms of section 8(4)(a) of the Income Tax Act (ITA) would apply. 

This results in the participant being in a tax neutral position in respect of these costs which we believe was intended. We are not aware of any income tax exemption in section 10 or section 12P of the ITA (including the Eleventh Schedule) that would exempt the recoupment from income for tax purposes.

Disclaimer: Nothing in this query and answer should be construed as constituting tax advice or a tax opinion. An expert should be consulted for advice based on the facts and circumstances of each transaction/case. Even though great care has been taken to ensure the accuracy of the answer, SAIT do not accept any responsibility for consequences of decisions taken based on this query and answer. It remains your own responsibility to consult the relevant primary resources when taking a decision.


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