If you’re a South African living abroad — or considering the move — you have likely come across terms like tax emigration, financial emigration, ceasing tax residency in South Africa, and the finer points of expat tax. Though they may sound similar, each has its own implications. Understanding these will help you avoid unwelcome tax surprises, stay compliant with SARS, and manage your finances confidently as an expat.
In this smart-but-casual guide, we'll break down:
• The difference between non resident tax and forex income tax (aka expat tax),
• How expat tax exemption works,
• The exit tax you could face,
• What SARS looks for when granting non-resident status,
• And what tests — like the ordinarily resident test and physical presence test — really mean for you.
Once you have successfully completed ceasing tax residency in South Africa, SARS considers you a non-resident. That means only your South African sourced income—like rent, dividends, or property sales—is taxable. Salary earned overseas? Not taxed in South Africa once you’ve secured that non-resident status.
But tread carefully — moving abroad doesn't automatically change your status. You have to go through tax emigration, formally notifying SARS via eFiling and completing the proper steps.
If you’re still a South African tax resident, SARS expects you to declare all your worldwide earnings—even if you live and work abroad. This is what most people refer to as expat tax.
That said, you can benefit from a foreign employment income exemption, which lets you earn up to R1.25 million tax-free, provided you:
• Spend more than 183 days outside South Africa during a 12-month period, and
• Spend at least 60 of those days consecutively abroad.
Earnings above that threshold? Still taxable under South African rates.
Scenario: Still SA tax resident
Tax Status: Pay foreign income tax on global earnings (minus exemption)
Scenario: Ceased tax residency (“non-resident”)
Tax status: Only taxed on SA sourced income
To get to that non-resident stage, you must navigate tax emigration, which includes notifying SARS, submitting supporting documentation, and being mindful of any exit tax.
To officially cease tax residency (and avoid foreign tax on your earnings), you must go through SARS’s process, which involves but is not limited to:
1. Completing the RAV01 form via SARS eFiling to notify them of your change.
2. Submitting a Declaration of Cease to Be a Tax Resident, backed by documentation like proof of foreign residence, your visa, and a tax residency certificate from the new country.
3. Recognising that SARS may levy an exit tax—a deemed disposal of your worldwide (non-property) assets—applied as if sold on the day before your residency ended.
Two key tests determine whether you pass or fail:
• Ordinarily Resident Test (“Intention Test”) — Are your real ties still in South Africa? SARS considers your family location, property, business, social ties, and lifestyle.
• Physical Presence Test — Do you exceed certain day thresholds in SA? If you fail to meet them and remain outside for at least 330 consecutive days, you cease being a tax resident from the day you leave.
If you meet neither test, you can qualify as a non-resident — but SARS will expect a robust declaration.
South Africa has double taxation agreements (DTAs) with numerous countries — including the UK. These DTAs help prevent you from being taxed on the same income twice and can be especially useful if you're still partially considered a resident.
Yes, you can still own property in South Africa after ceasing residency — but any income (rent, dividends, profits) remains taxable, and future property sales may attract capital gains tax.
Likewise, any remaining financial or business ties may raise SARS’s scrutiny when assessing your non-resident status.
Understanding how ceasing tax residency in South Africa differs from standard expat tax is crucial for managing your global finances with peace of mind. While breezing past SARS’s checks may be tempting, the reality is that changes to your tax status demand a methodical process—testing your intent, your presence, and your ties to SA.
Get it right, and you can sidestep foreign income tax, avoid double taxation via DTAs, and only pay what’s owed on your South African earnings. Just be mindful of potential exit tax, and consider expert guidance to navigate this transition smoothly.
Unsure of what you need to do or where to start? We can assist with both your UK and SA tax resposibilities for indaviduals and/ or businesses.
Contact us for personalised advice and a free quote!
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