Living abroad does not automatically end your South African tax obligations. Many South Africans are surprised to discover that even after moving overseas, the South African Revenue Service (SARS) may still regard them as a South African tax resident. That means you could still be liable for tax on your worldwide income — including your salary earned abroad, offshore investments, or foreign pension income.
The key thing to understand is this: where you live and where SARS says you are tax resident are not always the same thing. If you are already overseas or you’re planning a permanent relocation, understanding how SARS determines tax residency in South Africa can help you avoid unexpected tax bills, compliance issues, and unnecessary stress later on.
Top three takeaways for expats on tax residency in South Africa
Before unpacking the technical rules, here are the three most important things every South African abroad should know:
- Living overseas does not automatically end your South African tax residency. Even if you have been abroad for years, SARS may still regard you as a resident for tax purposes if your long-term ties to South Africa remain strong.
- SARS looks at more than just the number of days you spend outside South Africa. SARS also considers whether South Africa is still your true or permanent home through the ordinarily resident test.
- The foreign employment income exemption does not mean you stop being tax resident. Many expats misunderstand the foreign employment income exemption. While it may reduce your tax liability on foreign earnings, it does not automatically change your
South Africa tax residency status, and you do still have to declare your income to SARS to use it.
Read more: South African tax residency rules – expats, are you still tax residents of South Africa?
Why tax residency matters in South Africa
South Africa has a residence-based tax system. This means anyone who meets the requirements of tax residency in South Africa is generally taxed on worldwide income, regardless of where it is earned.
This can include:
- Foreign employment income
- Offshore rental income
- Overseas investments
- Capital gains on global assets
By contrast, a non-resident for tax purposes in South Africa is generally only taxed on South African-sourced income. This is why understanding your tax residency South Africa status is so important if you live abroad.
Read more: Why South African expats must stay sharp on SARS tax residency rules.
The two tests SARS uses to determine tax residency
SARS uses two main tests when determining whether someone remains tax resident:
If you meet either one of these tests, SARS can still see you as a tax resident in South Africa. Most importantly, unless you have formally ceased your tax residency with SARS, the revenue authority is entitled to treat you like a tax resident.
Read more: Reality check: Leaving South Africa doesn’t always mean leaving SARS behind.
Looking at the ordinary residence test
The ordinary residence test is the primary test SARS applies. In simple terms, SARS asks whether South Africa is still the place you naturally think of as home — the country you intend returning to after temporary absences abroad.
This is also known as the ordinarily resident test. Even if you are living overseas, SARS may still consider you to be ordinarily resident if your personal and financial connections to South Africa remain significant.
SARS looks at factors such as:
- Where your family lives
- Whether you still own property in South Africa
- Your business and financial interests
- Where your assets are based
- How often you return to South Africa
- Your long-term plans and intentions
For example, if you moved overseas on a temporary work assignment but kept your family home and financial life in South Africa, SARS may still see you as ordinarily resident. This is why simply relocating abroad is not enough to automatically end your tax residency in South Africa.
Read more: Working abroad, taxed at home – why your South African tax residency still matters.
Looking at the physical presence test
If SARS determines that you are not ordinarily resident, the next step is the physical presence test in South Africa. This test focuses entirely on the amount of time you spend physically present in South Africa.
Read more: 183 days, 60 days, and endless confusion: your simple guide to SARS’ time rules.
Understanding the foreign employment income exemption
The foreign employment income exemption is another area that often causes confusion among expats. Under current rules, qualifying taxpayers may exempt a portion of their foreign employment income from South African tax if they work outside South Africa for more than 183 full days during a 12-month period, including a continuous period of more than 60 full days.
This is sometimes referred to as the exempt foreign employment income provision. However, qualifying for this exemption does not mean your South African tax residency ends, or that you can forget about SARS.
You may still need to:
- Submit South African tax returns
- Declare worldwide income
- Remain fully compliant with SARS
This is one of the biggest misconceptions surrounding South African expat tax and tax for expats South Africa.
Read more: Hot question: do you pay tax in South Africa if you live abroad?
Ceasing tax residency in South Africa
To formally end your tax residency, you need to show SARS that you no longer meet either the ordinary residence or physical presence tests. This process of ceasing tax residency in South Africa is known as tax emigration. You formally notify SARS that you no longer meet the requirements for tax residency, and ask to have your tax status updated to non-resident. SARS then considers your application, looking at factors such as:
- Whether your move overseas is permanent
- Your visa or immigration status abroad
- Whether your family relocated with you
- Your intention to remain overseas indefinitely
- Whether your South African ties have been substantially reduced
Once they are satisfied all the signs point to you having cut ties with South Africa, your tax status changes and your tax obligations generally become limited to South African-sourced income. However, there can also be important capital gains tax implications when you formally cease tax residency.
Read more: Tax emigration – how to become a non tax resident of South Africa.
FinGlobal: tax emigration specialists for South Africans
Every expat journey is different, and your South African tax residency status depends on your individual circumstances. From your ties to South Africa to the amount of time you spend abroad, there are several factors SARS takes into account.
If you are unsure where you stand, FinGlobal can help you understand your tax position and guide you through the next steps — whether that involves tax emigration, international transfers, or accessing your retirement savings.
Leave your contact details below and our team will be in touch to discuss your options.