Practical Guidance: Emigration and Tax
Presenters : Adv Christel van Wyk
Overview
South Africa taxes its residents on worldwide income, so whether SARS still regards an individual as tax resident decides how far South African tax reaches. Tax emigration is not the same as leaving the country, giving up citizenship or the former concept of financial emigration. It depends on statutory residence tests, treaty provisions and the evidence placed before SARS. With SARS paying renewed attention to residence, particularly through double taxation agreements, this session sets out how residence is determined and how cessation is achieved and evidenced.
The session explains the ordinarily resident test, the physical presence test and the 330-day rule for breaking it, and the treaty tie-breaker sequence for individuals, illustrated with the South Africa–China DTA. It then covers choosing the correct basis for cessation, setting and supporting the effective date, the SARS notification process through the RAV01 and the supporting documents required, and the SARS confirmation of non-resident status that banks and retirement funds rely on. It addresses exit tax under section 9H: the deemed disposal on the day before residence ends, the assets affected and excluded, and the practical calculation. It also explains the foreign employment income exemption in section 10(1)(o) and why relying on it is not the same as ceasing residence.
The final part deals with the position after emigration: South African-source income, rental property, sales by non-residents, retirement fund access under the three-year non-residence rule, pension relief under the South Africa–Australia DTA, exchange control and tax compliance status. It closes with the risk areas SARS is likely to question, common mistakes, planning before and after departure, a client checklist and a case study.
Topics covered
- Why tax emigration matters: the residence-based tax system, tax emigration versus financial emigration, and the role of double taxation agreements
- The residence tests: the ordinarily resident test and the evidence that supports it, the physical presence test and the 330-day rule, and the treaty tie-breaker decision tree with worked examples under the South Africa–China DTA
- Ceasing residence: choosing the correct cessation basis, the effective date, the RAV01 process and supporting documents, and SARS confirmation of non-resident status
- Exit tax: the section 9H deemed disposal, how capital gains are taxed for residents and non-residents, the assets affected and excluded, and a practical calculation approach
- Foreign employment income: the section 10(1)(o) exemption, common misunderstandings about the R1.25 million limit, and treaty and section 6quat relief
- After ceasing residence: continuing South African tax obligations, rental income, the sale of property by a non-resident, and withholding tax
- Retirement planning: retirement annuities and preservation funds, the three-year non-residence requirement, tax directives, and Article 18 relief under the South Africa–Australia DTA
- Exchange control, compliance status and risk: transferring funds abroad, tax compliance status, the risk areas SARS may question, and four common mistakes
- Planning and application: planning before and after departure, a practical client checklist, and a case study of relocation to the United Kingdom
Learning outcomes
Practitioners will be able to:
- Apply the ordinarily resident test, the physical presence test and the treaty tie-breaker to determine an individual’s tax residence
- Select the correct cessation basis and effective date, and assemble the evidence needed for the SARS RAV01 process
- Identify the assets subject to exit tax under section 9H and calculate the resulting capital gains tax
- Distinguish the section 10(1)(o) foreign employment exemption from ceasing tax residence
- Advise on the continuing South African tax, retirement fund, exchange control and compliance consequences after emigration
Who should attend
Tax practitioners, accountants, financial planners and advisers who assist individuals planning to leave, or who have already left, South Africa.