South African tax on foreign income: do you have to tell SARS about it?

If you earn money outside South Africa, whether that is a salary from an overseas employer, rent from a flat in London, or interest sitting in an offshore savings account, you have probably wondered whether SARS needs to know about it.

The short answer is usually yes. Here is why, and what it actually means for you.

It comes down to one question: are you still a South African tax resident?

South Africa taxes people based on where they are tax resident, not where they earn their money.

If you are still a South African tax resident, SARS wants to know about your income from everywhere in the world, not just the money you earn here. If you cease your South African tax residency, SARS is generally only interested in income that comes from a South African source, like rent from a property here.

So, everything hinges on your tax residency status. And this is where a lot of people get caught out.

Simply living overseas does not end your South African tax residency. Neither does having been gone for five years, owning a home abroad, or holding a second passport. Ending your South African tax residency is a formal process that has to be done properly and recorded with SARS. Until that happens, SARS still counts you as a tax resident and still expects to hear about your worldwide income.

Read more: What is the difference between non-resident tax and foreign income tax in South Africa?

Declaring is not the same as paying

Telling SARS about your foreign income and paying tax on it are two separate things.

Some foreign income is exempt, meaning no tax is due on it. Some has already been taxed overseas, and you can claim credit for that. But in both cases, you still put the income on your tax return. The exemption or the credit is then applied to what you have declared.

Leaving it off the return entirely because you think no tax is owed is where the problem starts.

What counts as foreign income

More than just a salary. It includes:

• Money you earn working for an overseas employer
• Interest on offshore savings or bank accounts
• Dividends from shares in foreign companies
• Rent from property you own abroad
• Income from a business or freelance work overseas
• Foreign pensions
• Profit from selling something you own overseas

Each of these is treated a bit differently, so there is no single rule that covers all of them.

Read more: Tax implications for South African expats – declaring your worldwide assets and foreign income

The R1.25 million exemption, and why it may not help you

You may have heard that the first R1.25 million of foreign income per tax year is tax-free. That is broadly correct, but it is narrower than most people expect, so it is worth knowing where the edges are.

It only applies to salary income. If you earn foreign interest, dividends, rent, or income from your own business abroad, this exemption does not apply to you

It also applies only to employees. If you work for yourself overseas, or you are a contractor rather than an employee, you do not qualify.

And you have to have genuinely been out of the country. You need to have spent more than 183 full days outside South Africa in a 12-month period, and more than 60 of those days have to be in one unbroken stretch. SARS also works out the exemption based on the days you actually worked outside South Africa, so a qualifying year does not automatically shelter everything you earned in it.

Anything above R1.25 million is taxed at your normal rate.

What about other kinds of foreign income?

Let’s take a quick tour of the main ones.

• Offshore interest: In South Africa, you get a small amount of interest tax-free each year. That break does not apply to interest earned overseas. Foreign interest does not qualify for the South African-source interest exemption and is generally included in taxable income from the first rand.
• Foreign dividends: Part of the dividend is exempt, and the rest is added to your income. In practice, this works out to a maximum tax rate of 20% on the dividend. You cannot deduct any costs against it.
• Rent from an overseas property: This is taxable, but you can deduct the costs of earning it, like bond interest, rates, insurance and repairs.
• Foreign pensions: At the time of writing, pensions linked to past employment outside South Africa may remain exempt in specific circumstances, but this area should be checked carefully.

Read more: South African working abroad? How to handle foreign income on SARS tax return

Will you end up paying tax twice?

Usually not, and there are two things that protect you.

The first is a foreign tax credit. If you have already paid tax on income in another country, you can claim that tax back against your South African bill. It reduces what you owe here, though there are limits and you need proof of what you paid.

The second is a double taxation agreement. South Africa has agreements with many countries that decide which country gets to tax what. These can change the outcome significantly, but it depends on the specific agreement and your circumstances, and the relief is not automatic. You have to claim it.

SARS probably already knows

It used to be difficult for tax authorities to see what people held overseas. That is no longer the case.

Banks and financial institutions worldwide now report account details to local tax authorities. These authorities then share the information with other countries. South Africa is part of this system. SARS receives data about accounts and investments held abroad by South African tax residents. They can compare this with what people declare.

The reach is extensive. Updated SARS rules in February 2026 cover 253 jurisdictions. This includes many smaller places known for offshore banking.

SARS has been sending queries to taxpayers based on this information since 2019.

If you leave foreign income off your return, there is a reasonable chance SARS sees it anyway.

Read more: A comprehensive guide to the SARS foreign income tax exemption for South Africans working abroad

What happens if you do not declare

If your return is simply outstanding, SARS charges a fixed monthly penalty. Depending on your income, this ranges from R250 to R16,000 per month, and it can keep running for up to 35 months.

If income was left off, SARS can reassess you, add interest, and add further penalties on top.

But the bigger issue is often the one that is harder to put a number on: sitting with a tax position you cannot explain if SARS asks you to.

Read more: South African expat tax explained – maximising foreign income and minimising tax burdens – FinGlobal

Dates to know

For the tax year running from 1 March 2025 to 28 February 2026:

• If you are a regular salaried taxpayer and were not auto-assessed, you have until 23 October 2026
• If you are a provisional taxpayer, you have until 22 January 2027

One thing to watch. If SARS sent you an auto-assessment, check it before you accept it. Auto-assessments are built from information SARS receives from banks, employers and medical schemes here, and foreign income often does not show up in them. If yours is missing something, you need to file a corrected return by your deadline.

Not sure where you stand?

Most people asking whether they should declare foreign income are really asking a different question underneath it: am I still a South African tax resident?

That is the one worth getting a clear answer on, because everything else follows from it.

FinGlobal helps South Africans at home and abroad work out their tax residency status, cease South African tax residency where appropriate, and stay compliant with SARS. Leave your details below and one of our consultants will be in touch.

FinGlobal is a licensed South African Financial Services Provider, FSP number 42872.