If you’re a South African working or living abroad, you’ve probably heard friends confidently throw around phrases like the 183 day tax rule or the 60 day test. Some swear that once you hit 183 days, you automatically stop being a tax resident in South Africa. Others believe the 183 day rule South Africa gives them a free pass on all foreign earnings forever. Unfortunately, none of that is true.
The South African Revenue Service (SARS) uses these time tests for one purpose only: to determine whether you can claim the foreign employment income exemption South Africa. They do not determine whether you are a resident for tax purposes in South Africa or whether you can cease tax residency South Africa. That is a completely separate process.
So let’s break it down simply, minus the legal jargon and confusion.
Top 3 takeaways for expats on the 183 days rule:
- The 183-day rule for tax purposes only affects the exemption on foreign employment income, not your tax residency in South Africa.
- Residency is assessed using the ordinarily resident and physical presence tests. You are still a tax resident in South Africa until you formally cease residency with South Africa.
- If you want to stop paying tax in South Africa on your worldwide income, you must complete formal tax emigration and ensure SARS reflects you as a tax non-resident of South Africa.
Read more: Why South African expats must stay sharp on SARS tax residency rules.
The big misconception: “I lived overseas for 183 days, so I’m no longer a tax resident”
Let’s clear this up first, because this myth gets more South Africans into trouble than anything else.
The 183-day rule in tax residency is not actually a tax residency test. It is only part of the foreign employment income exemption process. This exemption allows qualifying South Africans working abroad to exclude a portion of their foreign salary from foreign income tax South Africa.
To determine whether you are a tax resident of South Africa, SARS applies two tests:
- The ordinarily resident test
- The physical presence test
Neither of these tests uses the 183 days at all. The 183- and 60-day rules are only for the foreign employment income exemption, not for determining residency.
This means you can live abroad for 183 days, 200 days, or even several years and still be fully taxable as a resident for tax purposes in South Africa if you have not formally ceased residency with SARS. Until you break both tests and notify SARS that you want to cease tax residency with South Africa, you remain a resident by default.
So, what exactly is the 183-day rule?
The 183-day rule for tax comes into play if you want to use the foreign employment income exemption in South Africa. To qualify, you must meet two-time requirements within any 12 month period:
- You must spend 183 days outside South Africa: These days can be consecutive or broken up.
- Of those 183 days, at least 60 days must be continuous.
This is the 60-day test. If you do not meet the 60 consecutive days requirement, you cannot claim the exemption, even if you meet the 183-day requirement.
If both tests are met, your foreign employment income can be partially exempt from South African tax, up to R1.25 million per annum.
Here is the catch: this exemption does not apply to independent contractors. If you are freelancing abroad, the independent contractor tax South Africa rules apply instead and the 183-day rule does not help you.
The 183-day rule does not change your tax residency.
Tax residency is determined only by:
- The ordinarily resident test: SARS asks whether South Africa is the country you consider home. It is about intention, ties, assets, and lifestyle patterns.
- The physical presence test: This applies only if you are not ordinarily resident. If you spend enough days in the country over a rolling period, SARS still treats you as a resident.
To stop being a resident, you must take deliberate steps to cease tax residency in South Africa. Nothing about the 183-day rule South Africa changes your residency automatically.
Read more: Breaking tax residency with SA: when to apply the physical presence or ordinary residence test.
Working abroad temporarily? The 183-day rule might be perfect for you
If you’re planning to return to South Africa and don’t intend to break residency, then using the 183 day rule for taxes can reduce the amount of tax you owe. You’ll still be regarded as a resident for tax purposes South Africa, but the expat tax exemption softens the blow on foreign earnings.
However, SARS is strict. If your overseas assignment is delayed, cancelled, or cut short, you might fail the 60-day test and lose the exemption entirely.
Working abroad permanently? You need to cease tax residency
If your move is permanent, the 183- and 60-day tests can’t help you. You need to change your status with SARS, so they stop taxing your worldwide income. This is where clarifying your tax residency status in South Africa becomes critical.
Once SARS recognises you as a non-resident taxpayer in South Africa, only your South African sourced income remains taxable. That includes rental income, local interest, and certain capital gains.
Many South Africans assume they are already non-resident simply because they no longer live in the country. The reality is that unless you have formally ceased tax residency, SARS continues to regard you as a tax resident in South Africa.
Read more: Tax emigration – how to become a non tax resident of South Africa.
Why this matters for expats
If you get this wrong, you risk double taxation, surprise tax bills, and expensive disputes with SARS. Many expats only discover years later that they were still regarded as South African residents and should have filed annual returns all along.
The 183-rule relating to foreign employment income tax may be helpful, but it is not a long-term solution for expats building new lives abroad.
Read more: The dangers of not completing tax emigration after you leave South Africa.
How FinGlobal can help South Africans abroad
Understanding expat tax South Africa can feel overwhelming, especially when you are trying to balance life abroad with SARS’ rules back home. If you need clarity on non resident tax in South Africa, want to apply the foreign employment income exemption, or are ready to complete tax emigration so SARS officially recognises you as a tax non-resident, and you become eligible to cash in the full value of your retirement annuity, FinGlobal is here to help.
With expert cross border guidance and a focus on keeping you compliant, we can make the process simpler and stress free. When you are ready for certainty and peace of mind, our team will help you get your tax residency status sorted in South Africa, the right way.
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