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FACE TO FACE WITH
ASPASA
April - May 2015
MODERN QUARRYING
29
members
operations and depends on the benefi-
ciation of the product after it is removed
from its natural state.
Du Toit says much work needs to be
done in hammering out agreements on
where and how the value of products
should be determined in order to allow
fair and equal payment of royalties across
the industry.
“Some operations remove material
directly from the natural state and load it
onto a truck for sale, while others have to
blast, transport, crush and move materials
to a muck pile. Understandably, the cost
and price of these materials are different
and may drive the cost of royalties up. On
the other hand, the calculations involved
for each operation is complex and in
some instances, leads to disparity in the
cost-per-ton being claimed,” she says.
“Aspasa is therefore seeking simpli-
fication of the requirements of sand and
aggregate quarries. In the meantime, if
any Aspasa members believe that royalty
calculations are incorrect, we strongly
advise them to first ensure that they fol-
low the necessary steps needed to com-
ply with the payment of royalties, while
simultaneously bringing the necessary
applications to SARS in order to lodge a
query.”
She explains that the industry is cur-
rently contending with various other
problems relating to royalties, rang-
ing from companies that are having
difficulty even registering to pay roy-
alties, while others have had their cal-
culations disallowed by SARS due to
technical disagreements, etc. Another
area of some confusion is who and
when parties are liable to pay royalties.
“Firstly, it is important to know that if
you are the holder of the mineral rights,
old order rights or a lessee or a sub-les-
see of rights, it is up to you to register
and pay royalties,” Du Toit warns. “These
then become due upon the transfer of
minerals, ie, disposal, consumption, theft,
destruction or loss (other than flaring).
It is important to know that in the quar-
rying industry the definition of minerals
includes sand, stone and clay, so quarries
will usually always have to pay royalties in
some form or another.”
Although it is widely accepted that the
payment of royalties be calculated at the
muck pile, there are, in some instances,
extenuating circumstances where the
calculations cannot be made at the muck
pile, or where the muck pile is not the last
mining process in a quarrying operation.
“For this reason, Aspasa is engaging
with SARS and Treasury to gain more
clarity on the situation to ensure that its
members are able to fulfil their obliga-
tions without falling foul of royalty and
tax legislation,” she says.
Diesel rebate victory
Sand and aggregate quarry operations
may continue to claim diesel rebates fol-
lowing intense legal wrangling between
the quarrying industry’s representative
body and SARS.
Much confusion has plagued the
industry following amendments to the
diesel rebate scheme in 2011, which
was interpreted by some SARS offices to
effectively exclude quarries from receiv-
ing the rebate. Mounting numbers of
disqualifications later sparked Aspasa to
enter into robust legal discussions with
the revenue services, which led to the
2013 amendment to the scheme, which
once again made allowances for quarries.
As a result of the amendments, Aspasa
has appealed to its members to take up
the issue with local SARS offices wherever
claims were disallowed, to ensure that the
correct requirements are in place to expe-
dite future claims.
Attorney Freek van Rooyen from
Shepstone & Wylie Attorneys, who acted
on behalf of the industry, says that
although quarries are allowed to claim
diesel rebates for off-road vehicles and
equipment, these are only applicable
where they are used for the purposes of
primary mining.
“In order to qualify, users should be
registered for value-added tax, as well as
diesel refund purposes as contemplated
in Section 75(1A) and (4A) of the Act. They
must also be the purchaser of the diesel
and must be the holder of the required
authorisation in terms of the Mineral and
Petroleum Resources Development Act
28/2002,” he says.
“Fuel may only be used for the com-
pany’s own primary production activi-
ties in mining or by contractors on a dry
(excluding fuel) basis only. Thereafter,
SARS needs to know that activities are
taking place only where mining opera-
tions are conducted and, in addition,
equipment needs to be identified and all
required records made available to show
the usage and associated consumption.”
He adds that other requirements call
for diesel to be purchased and used in
the Republic and that claims by way of a
VAT return are submitted within two years
from purchase. Required records need to
be available for inspection, if required, for
a period of five years after a claim is sub-
mitted. Losses through theft, accident or
leakage also need to be reflected.
“With tax season upon us, it is
important for members to make them-
selves familiar with all the requirements
for claiming and administering diesel
rebates,” Van Rooyen urges. “Wherever
uncertainty exists, or if there are special
requirements needed by our members,
then we suggest that they get in touch
with the local tax office.”
If problems are encountered or if all
the requirements are met and rebates are