Tax residency in South Africa is no straightforward matter. Although you might have lived abroad for a number of years already, if you return to the Republic often enough and for long enough, you might still be considered a tax resident. South African tax residents are expected to file tax returns to declare and pay income tax on all of their earnings, including foreign employment income. So how do you know if you’re a South African tax resident, and what should you do about it? Let’s take a look at some of the possible scenarios.

Scenario 1: I completed financial emigration from South Africa a number of years ago. Does that make me a tax non resident?

Having completed the process of financial emigration from South Africa does not automatically make you a non-resident for tax purposes, unfortunately. This is because financial emigration was a process overseen by the South African Reserve Bank and the outcome was to change your status from resident to non-resident, purely for exchange control purposes. Now that financial emigration has been phased out, you will still have to complete the process of tax emigration through the South African Revenue Service (SARS) in order to become a non-resident for tax purposes.

Scenario 2: I emigrated from South Africa many years ago without having completed financial emigration. What does this mean for me?

This means that it is possible you might still meet the criteria for being considered a tax resident in South Africa. SARS uses two tests to determine tax residency in South Africa – namely the ordinarily resident and physically present tests.

• The ordinarily resident test examines your intention to be a tax resident in South Africa, examining your personal circumstances in order to determine whether your departure is permanent or temporary.
• The physically present test assesses the amount of time you have spent in South Africa within the last five years, and examines whether you meet the time-based requirements for tax residency.

Read more: Breaking tax residency with SA: when to apply the physical presence or ordinary residence test.

Scenario 3: I emigrated from South Africa a number of years ago, and notified SARS by ticking the non-resident checkbox when eFiling my tax return in the year that I left. Does that mean I am a non-resident for tax purposes?

While this was the most straightforward time to notify SARS of your intention to no longer be a tax resident, the revenue authority has since then made a number of updates to the system and processes used to cease tax residency in South Africa. If you have done it this way, there are still a number of steps left for you to complete before you are officially a non-resident for tax purposes.

In other words, ticking a box was not all that was required from you in order to change your tax resident status. SARS still has a number of paperwork demands from you in order to verify your assertion that you no longer meet the requirements for tax residency in South Africa.

Why does my tax resident status matter if I left South Africa many years ago? Surely SARS won’t notice?

SARS is clamping down on expat non-compliance when it comes to their tax affairs. The only way to ensure that you’re not going to be surprised with administrative penalties and possible criminal prosecution is to terminate your tax obligations via tax emigration from South Africa.

Read more:

• What happens if I don’t emigrate for tax purposes?
• What happens when I do not declare foreign income if I have yet to cease SA tax residency?
• What happens if you ceased tax residency in South Africa a number of years ago without notifying SARS?
• SARS Voluntary Disclosure: window for non-compliant South African taxpayers to come clean.

So how do you become a non-resident for tax purposes and clarify your tax resident status with SARS?

In July 2022, SARS notified the public that the only way to cease tax residency in South Africa was not by means of ticking a checkbox, but rather by filling out a form. The RAV01 form to be specific. SARS now requires that individuals ceasing tax residency from South Africa to capture their updated details through the Registration, Amendments And Verification Form (RAV01) on eFiling.

Read more: Everything you need to know about using the RAV01 form on SARS eFiling.

Once your taxpayer registered details have been updated using the RAV01 form, the SARS system automatically creates a case to request relevant supporting documentation from you for the purposes of providing conclusive proof that you have the means and intent to live abroad permanently.

Terminating your tax residency – what happens next?

This step-by-step guide to ceasing tax residency and becoming a non-resident for tax purposes in South Africa will walk you through the requirements and give you an indication of the paperwork required, and the consequences of ceasing tax residency.

1. If SARS agrees that all your submitted documentation supports your assertion that you no longer meet their requirements for tax residency, your application to cease tax residency will be approved.
2. Your next ITR12 tax return will be auto-populated with the date on which your South African tax residence status changed.
3. Ceasing your tax residency in South Africa will trigger a capital gains tax liability in certain circumstances, known as exit tax.
4. You will need to submit your final tax return along with your Statement of Assets and Liabilities so that your capital gains tax liability can be assessed.
5. Once any exit tax has been handled, you will then request your Tax Compliance Status, after which you will be issued a TCS PIN that shows you have settled your obligation with SARS in respect of your emigration.
6. Your final step in tax emigration is complete when you have received proof from SARS in the form of a Non-Resident Confirmation Letter from SARS.

If you happened to have completed tax emigration before 2023, you’re still going to need to do this final step manually. You can do this by sending SARS a letter that contains the background of your request, the grounds on which you ceased residency, as well as the date and manner in which SARS was previously informed of such change. In other words, if you ticked the eFiling checkbox, you’re going to state as such.

Once you have completed tax emigration and received confirmation of your status change, it’s a good idea to deregister your tax number if you no longer have any assets or income in South Africa.

Are there any other benefits to getting confirmation of your tax resident status in South Africa?

You will need your Non-Resident Confirmation Letter from SARS for a number of things:

1. To protect your foreign employment income from SARS and terminate your tax obligation.
2. To withdraw the entire amount of your retirement annuity savings before the age of 55, once you have been a non-resident for a minimum of three years.
3. To gain tax clearance from SARS in order to transfer your remaining assets out of South Africa after your emigration.

FinGlobal: tax emigration specialists for South Africans

To ensure your seamless financial transition from South Africa, and to clarify your tax status with the South African Revenue Service, it’s best to call in the experts. FinGlobal has already assisted thousands of clients in more than 105 countries with various aspects of their cross-border financial portfolio, including tax emigration, tax clearance and retirement annuity withdrawal.

To see how we can assist you, please leave your contact details below and we’ll be in touch to find out more about your requirements.