Tax information: Leaving South Africa
Welcome to your tax guide leaving South Africa, produced by Deloitte. Looking for tax information about going to South Africa, Click here
This document has been prepared based on the legislation and practices of the country concerned as at 01 April 2009. Tax legislation and administrative practices may change, and this document is a summary of potential issues to consider. This document should not be used as a substitute for professional tax and immigration advice which should be sought for the country of arrival and departure in advance of moving in order to discuss your specific circumstances.
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Before/once you departQ. Should I complete any documentation prior to leaving South Africa?
A. You can file an interim return and pay any taxes due before departure if you are leaving South Africa permanently or indefinitely. Personal rebates are not prorated for persons filing interim returns; you are entitled to the appropriate rebate as though you were a South African taxpayer for the entire tax year.
Visitors to South Africa do not require tax clearance before leaving. However, please note that the moving company engaged to ship your household goods back to your home country may require you to obtain a tax clearance certificate. Should the individual immigrate permanently an application must be made at the Reserve Bank before leaving South Africa.
Q. Is it beneficial to use an offshore bank account in comparison with retaining a South African account when leaving South Africa ?
A. If you become non-resident for tax purposes in South Africa you will be subject to tax only on South African source income. Your interest received from a South African source will be exempt from tax in South Africa if you are outside South Africa for more than 183 days and do not carry on any business in South Africa.
South African tax residents remain subject to tax in respect of their worldwide passive income and therefore an offshore account will not provide tax benefits for South African purposes.
An offshore account may be advisable in order to benefit from tax reliefs in the country that you are going to.
Q. Will I be regarded as not resident of South Africa during my period overseas?
A . Tax residency will seldom be severed by South Africans on temporary assignment abroad. However, where there is an intention to make a permanent home elsewhere and this can be substantiated by facts, the South African Revenue Service (“SARS”) will accept that residency has been severed. The establishment of tax residency in another jurisdiction alone will not suffice.
Individuals who have worked in South Africa temporarily and triggered residency in South Africa for tax purposes may sever residency at the end of their assignment assuming it is shown that the assignment has come to an end.
For individuals who have been ordinarily resident in South Africa, intention will be the determinant of the residency end date, evidenced by the facts.
In the case of physical presence residence, 330 continuous days of absence from South Africa after the date of departure is required to break residence. Non-resident status will then become effective from the first day you left South Africa.
Q. Can I continue to contribute to my employer’s pension scheme?
A . You must remain employed by your South African employer in order to remain a member of their retirement scheme.
Q. Will I still need to complete a South African tax return after my departure?
A. If you are a South African citizen you will continue to be required to file a South African tax return during your absence.
If you are not a South African citizen you will not be required to file a tax return after your residency end date, provided you do not continue to have income from South African sources. You will need to request that SARS deregister you as a South African taxpayer to ensure that future income tax returns are not issued.
Q. Will I have to pay South African tax in respect of the employment income I will earn overseas?
A. The employment income of a South African resident (other than public officials and employees of other government authorities serving abroad) who is outside of South Africa for an aggregate period of 183 full days or more during any 12-month period, and for a continuous period exceeding 60 full days during that period, is not taxable in South Africa.
If you do not meet the above criteria you will be subject to South African tax in respect of the employment income you earn outside South Africa, although credits for tax paid in other locations may be available.
Q. Will I have to pay tax in respect of South African investment income earned while overseas?
A. South African residents will continue to be subject to tax in respect of worldwide income, including investment income. Non-residents generally are taxed on South African source income that is not of a capital nature.
Q. I plan to sell my South African property while overseas. Are there any capital gains tax implications?
A. Generally, from a South African tax perspective, the sale of a principal residence is exempt from the capital gains tax provisions up to a gain of R1.5 million. Certain conditions apply in order for this exemption to apply and you should therefore confirm these prior to sale. From the 2010 tax year, the disposal of a primary residence which is disposed of for a gross amount of R 2 million or less will be exempt from capital gains tax.
You should also confirm any tax implications generated by such sales in your country of destination.
Q. I have a number of South African company shares. Will I remain liable to South African capital gains tax if I sell any of these while outside South Africa?
A. If you remain resident in South Africa you will be subject to capital gains made in respect of worldwide assets. If you become non-resident you will be subject to South African CGT only in respect of immovable property situated in South Africa.
Upon breaking residence in South Africa, you should note that there is a deemed disposal of all worldwide assets on that date, and CGT will apply. If the gains exceed the losses, tax will be payable on the taxable capital gain (25% of the total gain will be included in income and taxed at your marginal rate).
This deemed disposal of assets will mainly apply to non-South African nationals who have been working in South Africa for several years (typically more than 5 years). If you are a South African national and are leaving the country with the intention of returning within a few years, these rules will typically not apply to you. However, if you are a South African national leaving on a more permanent basis the deemed disposal rules will apply to you.
Q. What Social Security contributions will I pay when abroad?
A. South Africa has not entered into any"totalisation agreements" with any countries and therefore you will be required to pay social security in the country you are going to.
