Can SARS tax you on your way out the door? Yes, but not on everything, and not in the way most people expect.
The South African exit tax is a one-off capital gains tax charge that applies when you cease to be a South African tax resident. It treats you as if you sold your worldwide assets the day before your residency ends, even though nothing has actually been sold. Some assets are pulled into that deemed sale. Others are left out, either because SARS keeps the right to tax them later or because they are not capital gains tax assets at all.
Knowing which is which, is the difference between a manageable tax bill and an expensive surprise.
What the SARS exit tax actually is
There is no separate tax called an “exit tax” in South African law. The term describes the effect of section 9H of the Income Tax Act 58 of 1962.
You are treated as if you sold everything you own at market value on your last day as a resident, then bought it all back the next day at the same price. Nothing is actually sold. The tax bill is real all the same.
SARS says a deemed disposal for capital gains tax happens when someone ends their tax residency. It lists emigration alongside sale, donation, exchange, loss and death as events that trigger a disposal.
The logic is straightforward. While you were resident, SARS could tax your worldwide gains. Once you are tax non-resident, it cannot. Section 9H draws a line under the growth before those right falls away.
Read more: Understanding South Africa’s exit tax – a guide for expats
Exit tax South Africa: what triggers the charge?
The trigger is ceasing your South African tax residency. Not leaving the country and not giving up citizenship. Those are different things, and they are frequently confused.
South Africa uses two tests to decide whether you are a tax resident: the ordinarily resident test and the physical presence test. You stay a resident until you break the one that applies to you and tell SARS your status has changed. Living abroad for years does not do it on its own. You remain in the South African tax net by default.
The exit charge also applies no matter how your residency ends. You cannot sidestep it by choosing one administrative route over another.
What the taxman can touch
Section 9H casts a wide net. If an asset is not specifically excluded, it is in. That includes:
- Foreign immovable property, including a house bought in your destination country before you ceased residency
- Listed and unlisted shares, held locally or offshore
- Unit trusts and collective investment schemes
- Krugerrands and other coins made mainly from gold or platinum
- Crypto assets, which the Income Tax Act treats as financial instruments
- Shares in property-rich companies
That last one catches people out. Owning a flat in Durban in your own name is outside the deemed disposal. Owning the same flat through a company is not, because it is the shares that are deemed to be sold.
What the taxman cannot touch
Section 9H(4) carves several categories out of the deemed disposal. A few other assets fall outside it because they are not capital gains tax assets in the first place.
South African immovable property. Excluded, because SARS keeps the right to tax it later. When a non-resident eventually sells South African property, capital gains tax still applies. On sales above R2 million, the buyer must also hold back part of the purchase price and pay it to SARS as an advance against the seller’s bill, currently 7.5% where the seller is a person rather than a company or trust. Nothing is forgiven here. The tax event is simply postponed.
Assets tied to a South African permanent establishment. Excluded for the same reason. If you run a business with a fixed base in South Africa, those assets stay in the net.
Certain employee share scheme instruments. Qualifying equity shares under section 8B, unvested equity instruments under section 8C, and rights to acquire marketable securities under section 8A all fall outside section 9H deemed disposal on cessation of tax residence.
Retirement fund interests. Your pension fund, provident fund, preservation fund and retirement annuity are not hit by the exit charge. SARS treats retirement benefits as a capital gains tax exclusion. That is a real exclusion, but it does not mean your retirement savings escape tax. More on that below.
Most personal use assets. Your car, your furniture and similar personal items are disregarded.
Cash. Currency is not an asset for capital gains tax purposes, so money in a bank account is not caught.
How the bill is calculated
The exit charge follows the ordinary capital gains tax method. There is no special rate.
- Work out the gain on each included asset: market value on the day before cessation, less base cost.
- Add the gains, subtract the losses.
- Subtract the annual exclusion, which is R50,000 for individuals for the 2027 tax year, up from R40,000.
- Multiply what is left by the 40% inclusion rate.
- Add that figure to your taxable income, where it is taxed at your marginal rate.
The top marginal rate for individuals is 45%, so the most you can pay is an effective 18% of the gain. These figures come from SARS and reflect the February 2026 Budget.
Here is a simplified example. Assume an offshore share portfolio with a base cost of R1.2 million and a market value of R2 million on the day before you cease residency.
| Step | Amount |
| Market value (deemed proceeds) | R2,000,000 |
| Less base cost | R1,200,000 |
| Capital gain | R800,000 |
| Less annual exclusion | R50,000 |
| Net capital gain | R750,000 |
| Included at 40% | R300,000 |
| Tax at a 41% marginal rate | R123,000 |
Your own figure depends on your total taxable income for the period, your base cost records, and any capital loss carried forward. Assets bought before 1 October 2001 need special rules applied to work out base cost.
Read more: What you need to know about how exit tax is calculated in South Africa
The two practical problems people underestimate
You pay cash on a gain you never received. Nothing was sold, so no money came in. The liability still goes into your final resident return and falls due in the normal way. Plan for it.
Your tax year splits in two. Cease residency on 1 June 2026 and your 2027 tax year becomes two periods: 1 March to 31 May as a resident, and 1 June to 28 February as a tax non-resident. You declare worldwide income for the first period and only South African income for the second.
There is no treaty relief and no foreign tax credit against the exit charge either. Section 9H deems the sale to happen while you are still a resident, and no real sale takes place abroad, so there is no foreign tax to claim back.
Retirement funds: excluded from the exit tax, not from tax
This is the most misunderstood part of the picture, so it is worth being precise.
Your retirement fund interest is not caught by the section 9H charge. It is taxed later, under the ordinary lump sum tables, when you withdraw.
Access is governed by the three-year rule. Since 1 March 2021, you can withdraw the full value of a retirement annuity or preservation fund once you have been a non-resident for three uninterrupted years. From 1 September 2024, that covers both the vested and retirement components.
A withdrawal on this basis is taxed under the withdrawal table, not the friendlier retirement table. SARS also adds up every lump sum you have taken since October 2007 when working out the rate.
One clarification, because bad information circulates here. National Treasury did propose a separate exit charge on retirement interests, under a new section 9HC, in the 2021 draft Taxation Laws Amendment Bill. It was withdrawn in November 2021 after public objections and never made it into the final bill. It is not law.
What SARS can still tax after you have gone
Ceasing South African tax residency narrows the net. It does not close it. As a non-resident, you remain taxable on South African income, which usually means:
- Rental income from South African property
- Capital gains when you eventually sell South African property, or shares in a property-rich company
- Income from a South African permanent establishment
- Dividends from South African companies, with 20% withheld
Before you cease residency
Section 9H is not optional, and getting it wrong brings penalties and interest. A proper asset review before your cessation date costs far less than fixing the problem afterwards. Establish your base cost, get defensible valuations, work out which assets are caught, and plan for the cash.
FinGlobal has helped more than 60,000 South Africans in over 105 countries with tax emigration, retirement annuity withdrawals and cross-border transfers since 2009. If you are planning your exit and want the tax position mapped before you commit to a date, get in touch for a no-obligation assessment.
This article is general information and does not constitute tax advice. Rates and thresholds are those applicable to the 2027 year of assessment as published by SARS following the February 2026 Budget and are subject to change. Individual circumstances differ. Please seek advice specific to your position before acting. FinGlobal is a licensed South African financial services provider, FSP 42872.
Article written by Hano Vermaak, Expat Financial specialist at FinGlobal.