Modern Quarrying April May 2015

FACE TO FACE WITH ASPASA

members

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

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

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

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MODERN QUARRYING

April - May 2015