SARS Tax Emigration - Complete Guide for South Africans

Tax emigration is the formal process of ceasing South African tax residency with the South African Revenue Service (SARS). Since March 2021 it is administered by SARS rather than the South African Reserve Bank (SARB) - there is no longer a separate 'financial emigration' application.

Until you have ceased tax residency, you remain a South African tax resident and remain liable for SA tax on your worldwide income - regardless of where you live, work, or earn. Many South Africans abroad do not realise this and remain inadvertently tax-resident for years after physically leaving.

Tax emigration is not the same as renouncing South African citizenship. You can cease being a South African tax resident while keeping your South African passport (and, since 2024, while also holding another country's passport).

South Africa uses residence-based taxation. As a SA tax resident you owe tax to SARS on your worldwide income - UK salary, Australian super, Canadian dividends, Dubai bonuses. Double Tax Agreements (DTAs) provide relief but rarely eliminate the SA charge entirely.

The 'section 10(1)(o)(ii)' foreign employment income exemption caps at R1.25 million of foreign salary earned during a 12-month period, with at least 183 days outside SA and at least 60 of them consecutive. Anything above R1.25M is taxable in SA on top of any foreign tax - and the exemption is narrower than many emigrants assume (it does not cover self-employment, rental income, dividends, or capital gains).

Non-residents, by contrast, are only taxed on SA-source income (rental from SA property, SA dividends, salary for SA work). For most emigrants this means the global tax burden drops substantially after tax emigration.

The two tests that determine SA tax residency are the 'ordinarily resident' test (a common-law test based on intention, habitual abode, and lifestyle) and the 'physical presence' test (a day-count test - 91+ days in the current tax year, 91+ days in each of the preceding five years, and 915+ days in aggregate over those five years). You become a non-resident only when you fail both tests.

The 'ordinarily resident' test is the harder one to break. It is about where your real home is - not just where you sleep most nights. Selling your SA primary residence, moving family abroad, terminating SA club memberships, and acquiring a permanent home overseas all support a case that SA is no longer your ordinary home.

The single biggest catch is the deemed disposal of worldwide assets on the day you cease SA tax residency. SARS treats you as having sold every capital asset you own - worldwide - at market value on that date, and charges capital gains tax (CGT) on the unrealised gains.

This includes JSE shares, unit trusts, ETFs, offshore investments, crypto, foreign property, and any other capital asset. CGT applies at an effective rate of up to 18% (40% inclusion × 45% marginal). It is a real tax bill paid on gains you have not actually banked.

• Primary residence - excluded up to the first R2 million of gain (s 10(1)(j) and s 26A read with paragraph 45 of the Eighth Schedule)
• Retirement funds (pension, provident, RA, preservation) - excluded; deemed disposal does not apply
• South African immovable property - excluded; remains SA-sourced and CGT only triggers on actual sale
• Foreign immovable property - included in the deemed disposal
• Foreign shares and investments - included
• Crypto (BTC, ETH, etc.) - included

The 3-year waiting period is one of the most-asked questions for South Africans abroad. The rule, in force since 1 March 2021, is that you can only withdraw a retirement annuity (RA), preservation fund, or part of your pension/provident benefits as a lump sum after you have been tax-resident outside SA for 3 consecutive years and have ceased SA tax residency.

This 3-year rule has not been removed (despite some outdated articles claiming otherwise). What changed is that the requirement is now demonstrated through tax residency status rather than the old SARB financial emigration process.

When you do withdraw, the withdrawal lump sum tax tables apply - currently up to 36% on amounts above R1.05 million (versus the retirement table which is much more generous up to 36% only above R1.05M after age 55). A pension fund and a provident fund have slightly different rules; a retirement annuity is the simplest.

South African Reserve Bank (SARB) exchange controls still apply, even after SARS tax emigration. The two key allowances are:

• Foreign Capital Allowance - R10 million per calendar year per adult; requires a Tax Clearance Certificate (TCC) from SARS for transfers above R1 million
• Single Discretionary Allowance - R1 million per calendar year per adult; no TCC needed; transferred through your authorised dealer
• Children under 18 do not have their own allowances

Transfers are done via an authorised dealer - typically your SA bank (Investec, Standard Bank, Nedbank, Absa, FNB, RMB). After tax emigration, you are treated as a non-resident for exchange control purposes, which actually simplifies many transactions (no annual allowance reset, you can move money out of inheritance/disposal of property without re-applying for the basic R10M).

For amounts above R10M, an Approval for International Transfer (AIT) is required from SARS - a more onerous process that takes 21+ working days. Many emigrants split transfers across calendar years (e.g. R10M in late December, R10M in early January) to stay within the standard allowance.

Married couples can effectively transfer R22M per calendar year using both partners' allowances (R10M + R1M each). The R1M discretionary allowance can be used freely for any purpose (gifts, investments, property, even online purchases denominated in foreign currency). The R10M foreign capital allowance can also be used for international investments and bank deposits.

After tax emigration, the structure changes slightly. As a non-resident for exchange control, you can move funds out of SA without the annual allowance cap - the AIT process becomes the dominant pathway. SARS will issue an AIT-specific PIN once it is satisfied with your final tax position (deemed disposal CGT paid, returns up to date).

Inheritance is another situation where the rules matter. If you inherit SA assets after emigrating, the assets are typically subject to SA estate duty (where applicable) and pass to you offshore via a process that does require SARS clearance and authorised dealer involvement. Many South African families set up family trusts or non-resident-friendly structures well in advance to ease this.

Living annuities and compulsory annuities (post-retirement income products) are governed by their own rules. A living annuity in the hands of a non-resident continues to pay out monthly income, taxed in SA at non-resident rates with potential DTA relief. Some pre-retirement preservation funds allow full withdrawal after 3 years of non-residency; others restrict to one withdrawal pre-retirement.

A practical sequencing tip: do not transfer your retirement annuity offshore the moment you become eligible. Compare the SA withdrawal tax (up to 36% above R1.05M) against the alternative of leaving the RA invested and drawing a non-resident-friendly living annuity. For many emigrants the latter is materially better after the DTA is taken into account. A cross-border tax specialist will model both scenarios in 30 minutes and the difference often runs into the hundreds of thousands of rand.

1. Confirm the tax rules in your destination country (UK SRT, Australian tax residency tests, Canada's substantial-presence rules, NZ transitional resident regime)
2. Establish tax residency in the destination country - typically through physical presence, primary home, and intent
3. Inform SARS by submitting the 'Notification of cessation of tax residency' via SARS eFiling under RAV01
4. Demonstrate cessation against the ordinarily resident test (intention) and the physical presence test (days)
5. Calculate the deemed disposal on the cessation date - market value of every capital asset
6. Pay the resulting CGT in the SA tax return for the year of cessation
7. SARS updates your status - your IRP5/IT3 stops, eFiling status changes to non-resident
8. Apply for a Tax Compliance Status (TCS) PIN for Approval for International Transfer to move capital above R1M
9. After 3 years tax-resident abroad, apply for retirement fund withdrawals (if needed); fund must verify your non-residency to SARS

For decades, section 6(1)(a) of the South African Citizenship Act caused automatic loss of South African citizenship the moment you acquired a foreign citizenship - unless you had applied for and received prior written permission from the Minister of Home Affairs.

In 2023-2024 the Constitutional Court (DA v Minister of Home Affairs and Another) declared this automatic loss unconstitutional. The judgment was confirmed in mid-2024. The practical effect:

• You can now acquire a foreign citizenship without losing your SA citizenship
• South Africans who previously lost citizenship by acquiring a foreign one can apply to reclaim their SA citizenship
• You can hold an SA passport alongside a UK, Australian, Canadian, NZ, US, or other passport
• You should still notify Home Affairs of any foreign citizenship acquisition (now treated as administrative notice rather than permission)

This is independent of SARS tax emigration. Citizenship status (Home Affairs) and tax residency (SARS) are now cleanly separated. Most emigrants want to retain SA citizenship (for the option to return) while ceasing SA tax residency (to remove worldwide tax).

1. Leaving SA without telling SARS - remaining a tax resident by default, sometimes for years, and then facing back-tax assessments on foreign income
2. Not planning for the deemed disposal CGT bill - being hit with a R200,000-R2 million CGT charge on shares and crypto without budgeting
3. Withdrawing retirement funds before completing the 3-year non-residency period - the fund refuses to release the lump sum
4. Failing to use the R1 million Single Discretionary Allowance - leaving 'free' transfer capacity on the table each year
5. Skipping a cross-border tax specialist - the savings dwarf the fees in 95% of cases
6. Assuming the DTA fully protects you - it provides credit relief, not full exemption; SA may still tax some categories of income that the DTA splits between countries

United Kingdom - the UK-SA Double Tax Agreement covers employment income, dividends, interest and capital gains. Your UK salary is taxed in the UK only once you are UK tax-resident (the Statutory Residence Test determines this, not the visa). The UK does not tax foreign income for the first 4 years for new arrivals under the post-2025 regime - a significant planning window. Investments and property gains may still trigger SA CGT at deemed disposal.

Australia - the Australia-SA DTA exists but Australian Superannuation interacts awkwardly with SA retirement funds. Transferring an SA pension or RA to an Australian super is usually not allowed (the funds don't recognise each other), so most SAs keep their SA RA invested and withdraw later. Australia's worldwide-income rule for tax residents kicks in immediately on becoming Australian-resident.

Canada - the Canada-SA DTA helps but the interaction between an SA RA and a Canadian RRSP needs specialist advice. Canadian tax residency triggers worldwide-income reporting from day one, and SA assets held at landing affect the foreign-asset disclosure (T1135). Plan the deemed disposal and the Canadian landing date together.

New Zealand - has a transitional resident exemption: for the first 4 years (49 months) after becoming NZ tax-resident, most foreign income and gains are not taxable in NZ. This is hugely advantageous when combined with SA tax emigration - you can structure the deemed disposal so that the bulk of any remaining gains accrue during the transitional window and escape NZ tax.