Many South Africans who move abroad still talk about “financially emigrating”. The term dates from a time when emigration was a formal exchange control process handled through the South African Reserve Bank. That process was phased out from 1 March 2021. Today, what matters is whether you have ceased to be a South African tax resident, and whether SARS knows about it.
Leaving the country does not automatically end your South African tax obligations. If SARS still has you on record as a resident, it may expect you to declare your worldwide income. At the same time, ceasing residency has its own tax cost, including a possible exit tax on your assets.
The rules continue to tighten. In the 2026 Budget Review, National Treasury proposed limiting the donations tax exemption for gifts between spouses where the receiving spouse is not a South African resident, aimed at couples who stagger their departure to reduce exit tax. This article explains how tax residency is determined, what happens when it ends, and the practical steps involved.
Who is a tax resident?
Under the Income Tax Act 58 of 1962, an individual is a South African tax resident if they meet either of two tests:
- Ordinarily resident. This is the place you would naturally return to after your travels, your real home. It depends on facts such as where your family lives, where your home and belongings are, where your economic interests are, and your intentions.
- Physical presence. If you are not ordinarily resident, you are still a resident if you were physically in South Africa for more than 91 days in the current tax year and in each of the five preceding tax years, and more than 915 days in total over those five years. A person who meets this test ceases to be resident if they are outside South Africa for a continuous period of at least 330 full days.
A person who is deemed to be exclusively resident in another country under a double tax agreement (DTA) is not a South African resident for tax purposes. DTA “tie-breaker” rules look at factors such as where you have a permanent home and where your personal and economic ties are closer.
Residency ends based on the facts. It is not something you can simply elect. However, you must tell SARS, and you will need evidence to support the date on which you ceased to be resident.
What happens when you cease to be resident
The tax year is split
Your year of assessment is deemed to end on the day before you cease to be resident, and a new year begins on that date. You file one return for the resident period, when you are taxed on worldwide income, and one for the non-resident period, when you are taxed only on South African-source income.
Exit tax under section 9H
Under section 9H of the Income Tax Act, you are treated as having disposed of your worldwide assets at market value on the day before you cease to be resident, and as having reacquired them at that value. This can trigger capital gains tax even though you have sold nothing. South African immovable property is excluded, because South Africa keeps the right to tax it when it is eventually sold. Recent amendments also exclude retirement fund interests from section 9H, since those are taxed when benefits are paid out.
Exit tax can be significant for people with offshore investments, shares or a business. Valuations should be obtained as at the cessation date, and the tax may need to be paid through provisional tax.
Retirement funds
Since 1 March 2021, a person who has ceased to be a tax resident can generally only withdraw their retirement annuity or preservation fund benefits early once they have been non-resident for at least three consecutive years. The fund will require proof of non-resident status. The lump sum is taxed in South Africa, though DTA relief may be relevant.
Continuing South African tax
Non-residents remain taxable on South African-source income, such as rental from South African property and certain interest. When a non-resident sells South African immovable property, the buyer may have to withhold tax from the purchase price under section 35A, unless SARS issues a directive. Dividends from South African companies are generally subject to dividends withholding tax, subject to DTA relief.
Exchange control and banking
Although the old Reserve Bank emigration process has fallen away, transfers of funds abroad remain subject to exchange control rules. Banks will usually require proof of your tax status and a SARS tax compliance status PIN for larger transfers. Your local bank accounts will generally be re-designated as non-resident accounts, and credit facilities may be restricted.
The proposed spousal donation change
Donations between spouses are currently exempt from donations tax under section 56 of the Income Tax Act. Some couples have used this by having one spouse cease residency first, transferring assets to that spouse tax-free, and then having the second spouse leave with fewer assets subject to exit tax. The 2026 Budget Review proposed that, from 25 February 2026, the exemption should only apply to donations to a spouse who is a South African resident. Couples planning a staggered move should take advice on the current status of this proposal before transferring assets.
Practical steps
- Establish your cessation date and gather evidence, such as a foreign residence permit, employment contract, lease or property purchase, school enrolment and travel records.
- Get your tax affairs up to date. File outstanding returns and resolve any disputes or debt. If there are undisclosed amounts, consider the Voluntary Disclosure Programme first.
- Value your assets as at the day before cessation and calculate any exit tax.
- Notify SARS of the cessation through eFiling and file the returns for the split tax year, including any provisional tax.
- Obtain SARS confirmation of your non-resident status, which banks and retirement funds will ask for.
- Review your DTA position and your tax obligations in your new country.
- Update your estate plan, including your South African will, offshore wills and any trusts.
- Plan the timing of retirement fund withdrawals and transfers of funds abroad.
How O’Reilly Law can help
We advise individuals and families on ceasing South African tax residency, including the timing of cessation, exit tax, the interaction with double tax agreements, and the tax and estate planning consequences for assets, trusts and businesses left in South Africa. We assist with SARS disputes and voluntary disclosure applications, and work with financial advisers and offshore advisers to coordinate the move.
Contact us before you cease tax residency.
Related reading: The SARS Voluntary Disclosure Programme: regularising your tax affairs · International couples and matrimonial property
This article is general information and not legal or tax advice. Correct as at October 2026.