Budget 2026 brings several inflation-related threshold increases and one important policy change. Most updates are routine adjustments for economic changes, but a new rule will affect tax planning for South Africans living overseas, especially those ending their South African tax residency.
This summary outlines the most relevant updates for South Africans living overseas, those planning to formally emigrate, and individuals who have already become non-resident for tax purposes.
South Africa’s 2026 Budget Speech: What South African Expats need to know
Understanding South African tax residency status
Your status as a South African tax resident is central in determining how these changes affect you.
- South African tax resident (living abroad): Taxed on worldwide income. The Budget changes apply as described.
- Non-resident for tax purposes: Taxed only on South African-sourced income and South African assets (e.g., rental income from property or capital gains on SA property). Most adjustments in this Budget do not apply beyond SA-sourced items.
- Planning to cease residency: Particular attention should be paid to changes that may affect timing and the structuring of residency cessation.
Read more: South African tax residency rules – expats, are you still tax residents of South Africa?
Capital Gains tax: Adjusted exclusions
The following Capital Gains Tax (CGT) exclusions increased:
- Annual CGT exclusion: R40,000 → R50,000
- Primary residence exclusion: R2 million → R3 million
- Small business disposal exclusion (age 55+): R1.8 million → R2.7 million
- Death exclusion: R300,000 → R440,000
The maximum CGT rate for individuals remains at 18%.
Implications
- Tax residents benefit from higher exclusions on the disposal of assets.
- Non-residents may see a limited impact, typically only if disposing of South African property.
- Those ceasing tax residency remain subject to exit tax (section 9H) on worldwide assets as at the day before cessation. The increased exclusions provide only limited additional relief.
South African Retirement Fund Contributions: Deduction cap raised
From 1 March 2026, the cap for deductible retirement fund contributions increases from R350,000 to R430,000 (still limited to 27.5% of remuneration or taxable income).
Considerations
- This applies only to those still considered South African tax residents and contributing to local retirement funds.
- Those who have ceased residency and do not earn SA taxable income are not impacted.
- There is no effect on the three-year rule for accessing retirement funds after emigrating.
Tax-Free Savings Accounts (TFSA): Annual limit up
The annual TFSA contribution limit increases from R36,000 to R46,000. The lifetime limit remains at R500,000.
Considerations
- The higher limit benefits current South African tax residents.
- Non-residents may not see the same advantage, as gains in these accounts could be taxed in their country of residence.
Offshore Investment Allowance: Increased limit
The single discretionary allowance is now R2 million per calendar year, up from R1 million.
Considerations
- This change increases the ability for tax residents to move funds offshore during residency or before ceasing residency, without special tax clearance.
- Non-residents are not affected.
Retirement Annuitisation thresholds: Increased
- De minimis threshold: R247,500 → R360,000 (allows full lump-sum withdrawal instead of compulsory annuitisation)
- Living annuity commutation threshold: R125,000 → R150,000
Considerations
- Increased thresholds allow small retirement nest eggs to be taken as a lump sum before annuitisation.
- The three-year non-residency rule for early retirement fund access remains unchanged.
- Treasury will enforce that thresholds apply per insurer or fund.
Donations tax: Changes to spousal transfers
The annual tax-free donations limit rises from R100,000 to R150,000. However, a significant adjustment targets planning around tax residency cessation:
Previously, couples could stagger their tax residency cessation and transfer assets between spouses to reduce donations tax and exit tax under section 9H.
The donations tax exemption between spouses applies only if the receiving spouse remains a South African tax resident.
Implications
This restricts strategies involving inter-spousal transfers as part of exiting SA tax residency. Asset transfers between spouses can no longer be used to avoid both the donations tax and exit tax if one or both spouses are non-resident.
No changes to these areas
- Dividends tax (remains 20%)
- Interest exemptions
- Estate duty
Estate duty still applies to the worldwide assets of South African residents and to in-country assets of non-residents.
South Africa’s Budget speech summary for South African expats
Most Budget 2026 changes are routine inflationary adjustments, primarily affecting current South African tax residents. For expats, the offshore allowance increase is a notable update, and the donations tax amendment is relevant for residency cessation planning. CGT and retirement fund limits offer minor adjustments but do not change the core rules governing tax residency and exit taxes.
The most important factor remains establishing and maintaining the correct tax residency status, as this governs all resulting tax obligations. Clear understanding and appropriate planning are advised to manage any risks or surprises related to these Budget changes.
FinGlobal: cross-border tax specialists for expats
If the latest budget speech leaves you thinking about your financial future beyond South African borders — whether it’s managing tax implications, accessing retirement funds, or safely transferring your savings overseas — expert guidance can make all the difference.
FinGlobal helps South African expats and aspiring emigrants navigate tax emigration, exchange control, retirement annuity withdrawals, tax clearances, and more with clarity and compliance. Learn how to turn the budget’s implications into a coherent financial plan tailored to your situation.
Contact FinGlobal today for a personalised consultation and take confident control of your cross-border finances.
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