Once you’ve watched the short video below, you’ll see that physically leaving South Africa does not automatically end your tax obligations with the South African Revenue Service (SARS).
This is one of the biggest misunderstandings among expats abroad. Many South Africans assume that once they relocate overseas permanently, SARS automatically stops viewing them as South African taxpayers. Unfortunately, this is not always the case. If you have not formally updated your residency status for tax purposes, SARS is entitled to treat you as a South African tax resident, even years after you emigrated.
That could potentially expose you to tax on your worldwide income, including foreign salaries, investments, and other offshore earnings. The good news is that there are formal processes available to help you cease tax residency in South Africa correctly and compliantly.
Top 3 takeaways about tax emigration from South Africa for expats
- Physical emigration is not the same thing as tax emigration. Living overseas does not automatically make you a non-resident for tax purposes; SARS applies specific residency tests to determine whether you remain a tax resident or not.
- If SARS still considers you a tax resident, you remain liable for South African expat tax on worldwide income earned abroad.
- Formally completing the SARS tax emigration process is the only way to become a South African tax nonresident and simplify your long-term financial planning.
Read more: Financial emigration before 2021 does not mean you have ceased SARS tax residency.
Why does leaving SA not automatically stop your tax obligations
Many expats are surprised to learn that there is a major difference between physical emigration and tax emigration. Leaving South Africa permanently, getting foreign residency, or starting a new life abroad does not automatically end your South African tax residency.
SARS uses two main tax residency tests to determine whether you are still considered tax resident in South Africa:
- Â The ordinarily resident test
- The physical presence test
If you still meet the requirements of either test, SARS may continue to treat you as a resident taxpayer. This is why many expats eventually need to formally cease tax residency in South Africa once they settle abroad permanently.
Read more: Breaking tax residency with SA: when to apply the physical presence or ordinary residence test.
What happens if SARS still considers you a tax resident?
If SARS still regards you as resident, you may remain subject to expat tax South Africa obligations. This can include tax on:
- Foreign employment income
- Offshore investments
- Rental income earned overseas
- Certain foreign capital gains
Although tax treaties and exclusions may offer relief in some cases, they do not automatically remove your South African filing obligations. This is why many expats choose to formally complete the process to ceasing South African tax residency once they relocate abroad permanently.
Read more: Reality check: Leaving South Africa doesn’t always mean leaving SARS behind.
Tax emigration vs financial emigration South Africa
There is still confusion around the financial emigration vs tax emigration from South Africa situation. Before March 2021, financial emigration through the South African Reserve Bank was the formal process many expats followed when leaving South Africa permanently.
Today, the focus has shifted to tax residency status with SARS. This means expats now need to cease tax residency with SARS, instead of the old financial emigration process. Although many people still search for terms like ‘financial emigration from South Africa’ and ‘how to apply for financial emigration from South Africa,’ the modern process is centred around tax residency and SARS compliance.
How to formally cease tax residency with SARS
The process that needs to be followed in order to cease tax residency in South Africa involves formally notifying SARS that you have permanently left and no longer meet the requirements for tax residency. This includes:
- Updating your status via SARS eFiling
- Completing the RAV01 form
- Submitting supporting documentation
- Providing proof of foreign residency
- Demonstrating permanent relocation abroad
Depending on your circumstances, SARS may request additional supporting information before approving your non-resident status.
Read more: Tax emigration – how to become a non tax resident of South Africa.
Why formal tax emigration matters for expats
Completing tax emigration from South Africa correctly can offer several important benefits for expats abroad.
Depending on your situation, these may include:
- Ending double tax on most foreign income
- Simplifying future SARS compliance
- Accessing certain retirement products earlier
- Making international money transfers easier
- Supporting long-term offshore financial planning
Importantly, formalising your status can also reduce the risk of future disputes with SARS regarding your tax residency position.
Unlock your South African retirement savings with confidence
Read more: The dangers of not completing tax emigration after you leave South Africa.
FinGlobal helps South Africans abroad handle their tax emigration
For many expats, understanding the rules and procedures around tax emigration from South Africa can feel overwhelming, especially when it comes to dealing with residency tests, SARS documentation, and ongoing compliance requirements. Fortunately for South Africans living abroad, it’s not something that needs to be handled alone. If you need assistance with tax emigration, international money transfers, or retirement annuity encashment, FinGlobal is ready to walk you through every step.
Ready to make your international move official and make some international money moves? Leave your contact details in the form below, and we’ll be in touch to find out how we can help.