If you’re emigrating, you’ve probably already arranged the packing and moving of your belongings. You’ve likely already sorted out passports, visas and flights for your family members, and you have plans in place to find accommodation and get settled once you arrive. But what about your finances? Have you considered how you’re going to move your money out of South Africa once you leave?
What is tax emigration from South Africa?
In 2021, South African exchange control regulations and tax laws were amended to phase out the process of formal emigration, which was managed by the South African Reserve Bank (SARB) at the time. This was replaced by a process called tax emigration, which is managed now by the South African Revenue Service (SARS).
Tax emigration is the process through which South Africans notify SARS of their emigration, and clarify their tax status by ceasing their tax residency. This is how an individual changes their tax status from resident to non-resident, which simplifies their tax obligations significantly.
What is the difference between formal emigration and tax emigration?
Before March 2021, formal emigration was the only way for emigrants to settle their financial matters in South Africa. This process shifted their exchange control status from resident to non-resident and granted immediate access to Retirement Annuity (RA) savings. Now, tax emigration is the only way for emigrants to wrap up their finances in South Africa, and this tax residence process is overseen by SARS. This is because tax emigration has considerable tax implications on revenue collection when taxpayers leave the country and change their tax residency status to non-resident.
In the past, formal emigration was not compulsory when leaving South Africa. Today, tax emigration is the only way to sever tax ties with South Africa to avoid being taxed on your foreign employment income back home. Additionally, tax emigration is now the only way to access your RA after emigration before the age of 55, but there is a three-year lock-in that applies to these funds.
Who is tax emigration for?
Tax emigration must be undertaken by South Africans who:
- Have permanently relocated from SA with no intention of returning
- No longer wish to be taxed on their worldwide income in South Africa
- Now want to cash in their RA’s and transfer the proceeds abroad
Reminder: Just because you financially emigrated before 2021, does not mean that you have ceased your tax residency with SARS.
How does tax emigration from South Africa work?
In order to have your tax status changed from resident to non-resident, you will first have to ensure that you no longer meet the requirements for tax residency. This means that you no longer meet the requirements of either:
Once you are sure that you no longer meet these requirements, you will then use the RAV01 form on eFiling to update your details with SARS, which will trigger an investigation into your tax resident status and you will need to make a declaration that you have ceased to be a tax resident, and provide SARS with the necessary documentation to support your case.
- Expats! Are you still a tax resident in South Africa? Here’s how to find out.
- Breaking tax residency with South Africa: what you need to know about the SARS Declaration of Cease to be a Tax Resident.
Transferring money out of South Africa: exchange control limits
Once SARS has noted that your tax status has been changed from resident to non-resident, you can request a SARS Non-Resident Confirmation Letter. If you have previously completed tax emigration before the end of 2022, you will need to request this document manually from SARS.
SARS will only issue this document if you are up-to-date on your tax affairs, and there is no outstanding tax on your part. This means you will need to have filed your final tax return, and dealt with any capital gains tax liability that might have arisen upon ceasing your tax residency.
South African residents abroad may utilise the Single Discretionary Allowance to move up to R1 million offshore, without prior approval from SARS. As a fresh non-tax resident, you will need to run your planned money moves past SARS and ask for the go-ahead. Where previously SARS allowed an “Emigration” Tax Compliance (TCS) PIN and for a “Foreign Investment Allowance” (“FIA”) TCS PIN, these have since been merged into a single procedure known as the “Approval of International Transfer” or “AIT” TCS PIN.
Repatriating money from South Africa: the processes
In order to make an international money transfer from South Africa once you have ceased tax residency by means of tax emigration, you will need to complete the Approval of International Transfer process with SARS.
You will need the following documentation for the AIT TCS PIN:
- Specific proof of capital sources for funds to be transferred abroad.
- Statement of assets and liabilities (local and foreign) for the past three tax periods.
- Proof of tax non-resident status in South Africa, including the date on which you ceased residency – this is where your SARS Non-Resident Confirmation Letter comes into play.
- Relevant power of attorney if the application is submitted on your behalf.
Please note: if you wish to cash in your retirement annuity, you will need to have been a tax non-resident for no less than three years before SARS will authorise the withdrawal and international transfer of your funds.
FinGlobal: South African tax emigration specialists
Need assistance repatriating your money from South Africa? Choose FinGlobal as your cross-border financial specialist. We can assist you with tax emigration, tax compliance and walk you with every aspect of your Approval of International Transfer application with SARS. Once all that’s taken care of, we can assist you with making your international money transfer out of South Africa, ensuring you get your funds safely and swiftly.
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