Part 4: Expat’s Guide to SA Tax & Residency Rules

You’ve built a new life abroad. A new job, a new rhythm, maybe even a new language. But your financial footprint in South Africa is still there, stretching quietly across borders. For many expats, that footprint feels confusing, even daunting. Am I paying tax twice? What happens to my retirement savings? Do I need to keep filing returns?

This is Part 4 of our expat tax series, where we pull the whole journey together. In Part 1 we looked at what makes you a tax resident. In Part 2 we explained the steps to formally end that residency. In Part 3 we explored how to manage your South African assets as a non-resident. Now we zoom out and take in the full picture. How do you manage the long-term connection between your life abroad and your financial obligations in South Africa?

Think of this as the summation of our expat guide. We’ll unpack the rules around residency a little more, expand on how the so-called “exit tax” works, and show you how to manage South African assets and income from afar. The goal is clarity, structure, and a plan that gives you confidence no matter where you call home.

The First Question: Are You Still a South African Tax Resident?

It all starts here. Tax residency is the foundation. SARS looks beyond your passport stamps. The deeper question is where your personal and financial home is anchored.

The Ordinarily Resident Test

This is the big one. SARS asks: where do you naturally return to? Where is the centre of your life? They’ll look at:

• Where your family lives,
  
  
• Where you own or rent a home,
  
  
• Where your primary business or work ties are,
  
  
• Even the memberships, bank accounts, and belongings that signal your centre of life.

If too much of your life still points to South Africa, SARS may still see you as “ordinarily resident.” It’s a broad, sometimes subjective test, which is why professional guidance is essential.

The Physical Presence Test

If you’re not ordinarily resident, SARS shifts to counting days - this is where your passport stamps become important. The formula:

• More than 91 days in the current tax year,
  
  
• More than 91 days in each of the five preceding tax years, and
  
  
• More than 915 days in total over those five years.

Meet all three and you’re a tax resident.

Why This Matters

Getting this wrong has serious implications. Many expats assume that once they’re out of the country, they’re off SARS’s books. That’s not true. Until you formally break your residency, you may still be liable for tax on worldwide income. The first step is clarity on where you stand.

The "Exit Tax": Formally Saying Goodbye to SARS

Ceasing tax residency isn’t as simple as closing a bank account. It’s more like resigning from a club where you’ve been a lifelong member. Before you walk out the door, SARS checks your balance sheet and asks you to settle up. That’s where the “exit tax” comes in.

The Deemed Disposal Explained

Think of it as SARS pressing pause on your financial life. On the day before you cease residency, they pretend you sold all your worldwide assets at market value. Shares, unit trusts, global investments: all tallied as if you cashed them in. The growth up to that day is treated as a capital gain and taxed accordingly.

It may feel harsh, but it’s SARS’s way of claiming tax on wealth accumulated while you were part of the South African tax net. Once you leave, future growth is no longer theirs to tax.

What’s Included and What’s Not

The scope is broad, but not unlimited.

• Included: shares, unit trusts, global ETFs, offshore portfolios, foreign property, even collectibles if they’re considered investment assets.
  
  
• Excluded: immovable property in South Africa, cash holdings, retirement savings such as retirement annuities or pension funds.

These exclusions can make a big difference. If you own a flat in Cape Town, the exit tax doesn’t touch it until you actually sell. Retirement savings stay shielded until you’re eligible for withdrawal as a non-resident.

The Real-World Impact

This is often the moment of truth for expats. Sometimes it’s a small ripple, like a family heading to Australia with a modest JSE portfolio who discover the tax bill is no bigger than a school fee invoice. Other times it’s more of a wave, like a professional bound for Dubai with a hefty offshore account suddenly facing a seven-figure liability.

It sounds daunting, but here’s the upside: once you’ve settled your exit tax, the slate is clean. From that point on, South Africa steps out of the picture - the growth on your global assets is beyond its reach. Think of it as a final toll gate before the open road.

Why Planning Matters

Handled without care, exit tax can trip you up, draining liquidity or forcing you to sell at the wrong time. But with foresight, it becomes just another item on the moving checklist. The right approach can soften the blow and keep your financial plan on track.

Smart strategies include:

• Reviewing the timing of your exit relative to asset performance,
  
  
• Making use of capital gains exclusions,
  
  
• Considering whether to restructure holdings before the deemed disposal date,
  
  
• Exploring relief options under Double Taxation Agreements.
  
  

Exit tax doesn’t have to be a dead weight. With the right planning, it’s a manageable milestone that clears the way for a confident start in your new chapter abroad.

Life as a Non-Resident: Managing Your SA Finances from Afar

Once you’re officially a non-resident, the rules are far simpler. South Africa only taxes you on income that has its source inside the country. Everything else, from your overseas salary to your offshore portfolio, is no longer SARS’s concern. That shift alone often feels like a breath of fresh air.

Property and Rental Income

For many expats, property is the one tie that lingers. If you rent it out, the income remains taxable locally. When you eventually sell, capital gains tax applies, and as a non-resident you’ll also face withholding tax on the proceeds. None of this is unmanageable, but it does mean you should build it into your long-term plan. Selling may free up capital, while holding can create steady income. Both routes work. It’s about matching the choice to your bigger financial picture.

Investments

Your JSE shares, unit trusts, or other SA-based investments still fall under the local tax net. Dividends tax is deducted at source, interest has its own thresholds, and capital gains remain relevant. However, non-residents may qualify for an exemption on local interest if they were physically outside South Africa for more than 183 days during the relevant 12-month period. The good news is that the impact is often lighter than people expect. Double Taxation Agreements (more on this a little further on) can reduce dividend tax even further, and with smart structuring, you keep more of your returns. Think of it as pruning a tree so it grows stronger: a bit of careful shaping now can maximise what you harvest later.

Retirement Funds

This is the crown jewel for many expats. After three years of confirmed non-residency, you can withdraw your retirement annuities or preservation funds in full. Yes, the withdrawal is taxed in South Africa as a lump sum, but once that hurdle is cleared, the funds can be moved abroad and managed alongside your global portfolio. The key is timing. Plan the withdrawal carefully and you can turn what looks like a tax trap into a springboard for building wealth in your new home.

Double Taxation Agreements (DTAs)

DTAs are the unsung heroes of cross-border finance. They decide which country gets taxing rights on specific streams of income, and they’re the reason most expats aren’t caught in the nightmare of paying tax twice. The trick is knowing how the agreement with your new country applies, line by line. Read it right and you save yourself stress and money. Misunderstand it and you risk paying too much or falling foul of compliance. In short, this is fine print worth knowing.

Managing your expat tax journey is about foresight. Where are you resident? When should you exit? How do you manage assets left behind? Each step has ripple effects, from compliance to cash flow to long-term wealth.

It can all get a little tricky, so don’t go at it all alone. Contact Nolands Tax Today.