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Tax emigration from South Africa

Want to wrap up your tax affairs in South Africa? It’s time to exit the South African tax system. Want to cash in your Retirement Annuity early? Tax emigration is the only way.

What is tax emigration from South Africa?

Tax emigration is the process of notifying the South African Revenue Service (SARS) that you no longer fall into their exclusive tax jurisdiction and that you wish to change your status from resident to non-resident for tax purposes.

Tax residents pay tax on: worldwide income and worldwide asset base.

Non-tax residents pay tax on: locally sourced income and asset base.

What do expats need to know about South African tax law?

South Africa has a residence-based tax system. As a South African living (or planning to live) abroad, it is necessary to find out if SARS views you as a resident or a non-resident. This will determine whether you will be required to pay tax in South Africa on your worldwide income.

The Income Tax Act defines a resident for tax purposes, and it is important to note that the definition of a ‘resident’ for SARS purposes are not the same as the Department of Home Affairs’ definition of a ‘resident’.

You are a South African tax resident if you meet one of two tests

  • The ordinarily resident test or
  • the physical presence test and
  • you aren’t found to be exclusively a resident of another country for the purposes of the application of any tax treaty.

The ordinarily resident test is conducted first to determine residency. If the answer to this test is negative, only then is the physical presence test applied.

Applying the ordinarily resident test

Conducted by SARS, this is a subjective assessment into your intention as the taxpayer to be resident or not, and the surrounding circumstances that evidence your intention.

You are considered ‘ordinarily resident’ where you have your usual or primary residence – somewhere that can be described as your true home.

Applying the physical presence test

This is an objective test, because it’s based purely on the number of days you spent with your feet on South African soil during a specific time period. The parameters for this test are set by the South African Income Tax Act.

  • This test is used if you fail to meet the requirements of the ordinarily resident test where, for example, you left South Africa to work abroad with no intention of returning.
  • Only if you meet all the requirements of the test will you be considered a tax resident for that tax year and liable to pay income tax in South Africa on your worldwide income as a result. Even if you no longer consider South Africa your home, SARS still wants your money.

In order to meet the requirements of this test you must be physically present in South Africa for no less than:


  • 91 days in total during the tax year in question
  • 91 days in aggregate during each of the five tax years before that tax year
  • 915 days in aggregate during the five previous tax years.

How do you cease being a South African tax resident?

If you cease to be ordinarily resident in and you remain outside of South Africa for a continuous period of at least 330 full days, you will not meet the requirements for tax residency in South Africa.

In other words, you cease your South African tax residency if you no longer meet the requirements of the ordinarily resident or physically present tests.

In most cases, if you leave South Africa with the intention of relocating abroad permanently, you will cease to be a tax resident (in terms of the ordinarily resident test) meaning that you will no longer pay tax in South Africa on worldwide income – only on income from a South African source.

What are the tax implications when you cease to be a tax resident in South Africa?

Ceasing tax residency in South Africa is a trigger event for Capital Gains Tax (CGT), according to the Income Tax Act.

  • You are deemed to have sold all your worldwide assets to your foreign self at market value on the day before you ceased tax residency.
  • This means you become liable for CGT on your assets (even though you don’t really dispose of them), with the exception of immovable property in SA.

This can have a large financial impact when planning your emigration, so you should weigh up your options carefully.

What are the benefits of ceasing tax residency in South Africa?

  • You are no longer liable for tax on your foreign income in South Africa, you will be taxed only on locally-sourced income and assets.
  • You can cash in your pension preservation fund/provident preservation fund/ retirement annuity early provided you have maintained non-resident status in South Africa for at least three years.

How do you change your South African tax status from a resident to a non-resident?

Changing your tax resident status requires approval from SARS. Each case will be evaluated based on its own merits.

How do you notify SARS that you have ceased to be a tax resident in South Africa?

You can advise SARS that you no longer meet the requirements for tax residency, in one of two ways:

  1. Through eFiling by noting the date on which you ceased to be a tax resident.Note: Once a case has been created by SARS, you will receive a letter with a request to submit supporting documents.
  2. By capturing the date on which you ceased tax residency on your ITR12 tax return.

To ensure you have all bases covered, you can obtain a “tax residency certificate” from your local tax authority in your new home country verifying your new tax residency status.

Why do you need to notify SARS when you cease to be a tax resident?

This is to let SARS know that the way you are taxed is going to change, moving forward. The year in which you have ceased to be a tax resident may also trigger a deemed capital gains tax disposal, depending on the type of assets you held and where they are located at the time.

  • The ordinarily resident test or
  • the physical presence test and
  • you aren’t found to be exclusively a resident of another country for the purposes of the application of any tax treaty.

The ordinarily resident test is conducted first to determine residency. The physical test is only ever used if the answer to this test is negative.

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Emigrating from South Africa? Here is how to exit the South African tax system

As a South African living or planning to live abroad, you need to determine if you should pay tax in South Africa once you’ve moved offshore. Because South Africa has a residence-based tax system, persons who are a “resident” in South Africa (for tax purposes) are taxed on their worldwide income, subject to certain exclusions.

What is tax clearance and why do I need it?

Not everyone understands tax clearance and how it works. Unfortunately, most South Africans get a bitter taste in their mouths when the subject of tax arises, but in most cases if you want to move your money abroad, you will inevitably have to deal with SARS.

You may be eligible for tax relief under a Double Taxation Agreement

Many people who have emigrated from South Africa aren’t aware of their rights and the possible tax relief available to them if SA has a Double Tax Agreement (DTA) with their new country of residence.

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