If you are a South African tax resident, SARS taxes you on your worldwide income, subject to the exemptions and exclusions that apply. Every year you remain a resident is a year of foreign income to convert into rands and declare, foreign tax credits to claim and a return to file.

Residency has practical consequences beyond the tax bill. Withdrawing from a retirement annuity or preservation fund on the grounds of emigration only becomes possible after three years of confirmed non-residence. Capital transfers abroad follow the allowances and approvals set for residents. And when a bank or a fund asks you to prove your status, the document it wants is the SARS notice of non-resident tax status, which confirms that you have ceased to be a South African tax resident and gives the effective date.

Cessation is a formal process, and SARS decides it on the evidence you submit.

Let’s look at the proof SARS requires.

Read more: SARS Non-Resident Declaration – how to get confirmation of your tax non-residency

First, understand the South African tax residency test

South Africa taxes on residence, not citizenship. Since 1 March 2001, tax residents have to declare their worldwide income. Non-residents are taxed only on income from a South African source.

You are a tax resident if you are ordinarily resident here, or if you’re a non-resident who meets all the requirements of SARS’ physical presence test. That gives you three possible bases for ceasing, and the evidence SARS wants depends on which one applies to you.

• Basis 1: you ceased to be ordinarily resident. South Africa is no longer your real home. SARS looks at whether your intention to leave for good is backed up by facts, like where you live, work and keep your belongings. This is the most common route, and the one that needs the most paperwork.
• Basis 2: you failed the physical presence test. If you were a resident only because of the time you spent in South Africa, you stop being a resident once you have been outside the country for a continuous period of at least 330 full days.
• Basis 3: a double taxation agreement applies. If a DTA makes you a tax resident of another country, you also cease to be a South African tax resident.

Read more: Moved abroad? SARS may still consider you a South African tax resident 

Step 1: tell SARS on the RAV01

Capture the date you ceased to be a tax resident on the registration, amendments and verification form (RAV01) on eFiling, under the income tax liability details section. That date becomes the day you become a non-resident.

SARS then creates a case and sends you a letter requesting supporting documents.

Read more: South African tax residency rules – expats, are you still tax residents of South Africa?

Step 2: submit the declaration and your evidence

Complete the SARS declaration to cease to be a tax resident and submit it with the relevant supporting documents through eFiling or the SARS online query system.

Three items are required with every declaration, whatever your basis:

• the signed declaration setting out the basis on which you qualify
• a letter of motivation setting out the facts and circumstances in detail
• a copy of your passport or travel diary, including all pages showing relevant customs entry and exit stamps

If you ceased to be ordinarily resident, SARS asks for the following as well:

• the type of visa you went to the foreign country on
• proof of permanent residence in that country, if you have already taken it up
• a certificate of tax residence from the foreign revenue authority, or a letter confirming you are treated as a tax resident there, if available
• details of any property you still have available in South Africa, and what it is used for
• details of any business interests you still have here, including investments and employment
• details of your family, including whether any family members are in South Africa and why
• details of your social interests, such as gym contracts, clubs and societies, and where your personal belongings are
• details of return visits to South Africa, how often they happen and why

If you ceased by way of the physical presence test, only the standard requirements apply.

If you ceased due to a double tax agreement, you must provide a certificate of tax residence from the foreign revenue authority, or a letter from that authority confirming your tax resident status there.

Step 3: write a letter of motivation

Everything else on the list is a document you either have or do not have. The letter of motivation is the one piece you write yourself, and it is the piece SARS reads to understand the whole picture.

SARS assesses ordinary residence case by case, weighing your stated intention against objective facts. A letter that simply states you moved abroad does not do that work. A strong letter walks SARS through the timeline of your departure, explains what ties you cut and when, deals honestly with anything you still hold in South Africa, and explains why those remaining links do not make South Africa your real home.

Remaining links are not automatically fatal. A rental property or a South African bank account will not necessarily sink your application. What causes problems is leaving them unexplained, because SARS then draws its own conclusions.

SARS declines a declaration in two situations: where you do not meet the criteria for ceasing tax residency, or where you cannot provide the relevant material that SARS has requested. The second reason is entirely avoidable, and incomplete passport copies, thin letters of motivation and missing foreign tax certificates are common causes of delay.

Read SARS’ definition of ordinary residence and the physical presence test before you start writing. Both are linked at the end of this article.

Read more: Tax emigration – how to become a non tax resident of South Africa

Step 4: get your non-resident tax status in writing

Having declared your cessation is not the same as being able to prove it. If you previously informed SARS that you ceased to be a tax resident, you can request written confirmation. Your request should set out the background, the basis on which you ceased, and the date and manner in which you previously informed SARS.

This confirmation, commonly called the notice of non-resident tax status, is what third parties will ask to see. It confirms that you have ceased to be a tax resident and states the effective date. If you ceased residency in an earlier year and hold an emigration tax clearance certificate or a tax compliance status PIN for emigration, request the confirmation letter as well, because those older documents do not serve the same purpose.

Confirmed non-resident status is a gateway document. It is what allows you to:

• move money out of South Africa. Transferring funds internationally from a South African source as a non-resident may require the approval of international transfers (AIT) TCS (tax compliance status pin) process, depending on the transaction and circumstances.
• access retirement savings. Confirmed non-resident status, combined with the three-year rule, is what unlocks early withdrawal from South African retirement annuities and preservation funds.
• end your worldwide tax exposure. From the date your residency ends, you are taxed in South Africa only on South African-sourced income.

Do not forget the exit tax when ceasing South African tax residency

Ceasing South African tax residency has a price attached, and it is better to know about it in advance.

A deemed disposal for capital gains tax purposes takes place when you break your tax residency. You are treated as having disposed of your worldwide assets, excluding immovable property situated in South Africa.

This is the charge people refer to as exit tax. It is calculated on the day before your residency ends, and it is a real liability that needs to be quantified and settled, not a formality.

The mistakes we see most often

Assuming financial emigration did the job. Financial emigration does not mean you have ceased tax residency. If you emigrated through the Reserve Bank before March 2021 and never went through SARS, your tax residency is very likely still intact.

Only completing the RAV01. It isn’t enough; you also need to submit proof.

Never requesting the confirmation letter. Without it, you have no document to hand a bank, employer or fund administrator.

Quietly moving back. If your circumstances change and you become resident again, SARS must be told. Reinstatement is also declared on the RAV01 (in this case, no supporting documents are required).

Read more: Emigration and changing your tax resident status after leaving South Africa

Knowing what to do and how the rules apply to you is where the process starts. You also have to assemble the necessary evidence and draft a motivation that answers SARS’ questions.

FinGlobal has been guiding expats through ceasing South African tax residency, exit tax and cross-border transfers for years. Contact us for an assessment of your position and a clear plan to get your status confirmed.