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SA tax implications of emigrating

South Africans who emigrate need to prove that they are no longer resident in SA if they want to be treated as a non-resident for tax purposes.
A taxpayer's SA tax obligations do not cease the moment they step on a plane to start a new life elsewhere. Picture: Shutterstock

South Africa has recently gone through the perfect storm of political uncertainty. Low economic growth, lack of business confidence, and some significant tax policy amendments have resulted in an increase in the number of people contemplating emigration. However, when considering this move it is important to understand the tax implications involved.

South Africa has operated on a residence basis of taxation since 2001. This means that while residents pay tax on their worldwide income, non-residents will only be subject to tax on income earned from a South African source.

A person that emigrates must prove that they are no longer ordinarily resident in South Africa if they want to be treated as a non-resident for tax purposes. This generally means having to prove that they have taken up residence elsewhere. Alternatively, a taxpayer can embark on a financial emigration through the South African Reserve bank and the documentary proof of this emigration, along with the effective date of emigration, can be provided to Sars as evidence of the change in their residence status.

For capital gains tax purposes, where a person ceases to be a tax resident of South Africa, they are deemed to have disposed of all their assets on the date that they became non-resident. The only exclusion to this is the individual’s immovable property situated in South Africa and assets which form part of a permanent establishment (i.e. an office, branch or other fixed place of business) in South Africa. This exclusion is necessary as fixed property and assets of a permanent establishment will remain in the South African tax net even when the individual becomes a non-resident and SA capital gains tax will be payable on these assets if they are disposed at a later stage.

The result of the above is that capital gains tax will be payable by the taxpayer on the disposal of their overseas assets (including property, share portfolios, etc) and any other South African assets (excluding fixed property and personal use assets) owned by them. The gain will be equal to the market value of the asset on the date they cease to be a resident, less the base cost of the asset (i.e. the original purchase price or the value on October 1, 2001, if the asset was acquired before then) plus any costs incurred in improving the asset.

This gain will need to be declared in the tax return related to the year in which the taxpayer’s residence changes: For example, if the taxpayer emigrates on June 1, 2019, and becomes non-resident from this date, their gains will need to be declared in the tax return for the year ended February 28, 2020. Where the taxpayer is a provisional taxpayer, they will need to include these gains in their provisional tax returns for the tax year and where their taxable income exceeds R1 million, they must ensure that they pay tax on at least 80% of their estimated taxable income for the year by February 28 to prevent under-estimation penalties being levied.

A taxpayer who ceases to be a resident of South Africa will still be liable for income tax on their South African source income, including rental income earned on South African property (subject to certain exclusions), and will be required to continue submitting annual income tax returns despite their non-resident status. Where an individual has declared and paid tax on SA source income, most double tax agreements allow for this SA tax to be claimed as a credit against tax levied on this income in the new country of residence.

Certain South African source income, for example royalties and interest from non-financial institutions, will be subject to a withholding tax of 15% when paid to non-residents. This withholding tax is withheld at source so that the non-resident receives only the net tax amount. This is a final tax and the income will then be exempt from normal South African income tax.

When a taxpayer disposes of all South African assets prior to permanently emigrating and thereafter no longer earns any South African source income they must ensure that their status is updated with Sars so that they can be de-activated as a South African taxpayer. The taxpayer’s final required annual return will be for the tax year in which they emigrated and thereafter they should have no obligations to submit annual returns unless their status changes at a future date.

As can be seen, a taxpayer’s South African tax obligations do not cease the moment they step on a plane to start a new life elsewhere. Firstly, there needs to be a permanent move that changes that person’s ordinary residence status, which in turn triggers a capital gains tax effect which would need to be calculated and provided for, and secondly, where the taxpayer continues to hold SA property and/or earn South African source income they will need to ensure that annual filing requirements continue to be met. In all cases it is worth seeking the advice of a qualified tax practitioner with experience in this field to assist in determining the tax cost of emigration.

In addition, the practitioner can ensure that all South tax obligations are met in the year of emigration as well as in future tax years if necessary, thereby avoiding costly non-payment or non-submission penalties and interest.

Jeremy Burman of private client financial, a division of Private Client Holdings.

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The racist ANC regime thinks they will get additional tax by “closing loopholes” where South African citizens have simply upped and left owing to racist employment policies, rampant state corruption/ theft, implosion of the economy and out-of-control violent crime. What they are doing is making these citizens liable for huge tax debts if and when they return. There is thus a huge incentive for them to keep the cash offshore and buy a second citizenship in Malta or Portugal and never come back. SA is worse off. More unintended consequences.

Part of the craziness is that quite possibly many of the people the tax is aimed at trapping would have invested or even returned to SA. Now facing the real possibility of being taxed twice, they are unlikely to, or, if they do, their overseas money will be in a trust or similar, out of reach of SARS. Surprised they don’t make people working outside of SA apply for a visa to visit home; Gigaba style.

Second, what a waste of productivity to have another plague of parasitic financial advisers needed to navigate these pirate infested tax waters. Adding nothing.

Two words: TAX REVOLT.

Cut off the blood that feeds these parasitic biodegradable biological, economically worthless, financial leeches.

Eskom is two thirds overstaffed and each of those are on average three times overpaid. One example, among thousands, of the derangement that is permanent parasitic class.

I propose that SA has the fattest parliament in the known universe. Each obese leech cannot even walk to the bathroom, to dump the load the thing consumed when not sleeping in parliament (only interrupted to manually clear the wide nares) – so it has to transported around in luxury SUV’s made by the wit baas in Germany. Funny how they pray to the Chinese – but they refuse to drive their cars (verbatim the way it was in the Soviet Union).

They do not want us – but they want our taxes!?

Take your pick parasite: If you want our taxes – it comes with us.

Fundamental principle: You have zero obligation to pay taxes to a country that discriminates against you.

SA’s pale minority has more rights in eg Australia, Europe, the USA, NZ, than in the country of their birth.

If they want our tax revenue – then they end all forms of affirmative action immediately. Else two words:


How do you propose to do it? People who are employed have no choice, the company has to deduct the tax and pay to the taxman. The taxman can easily block you from accessing your bank account if they want it without a need of a court order and they can do the same to a company account if they stop paying the taxes deducted from the employees. With everything computerised they can do this easily to several hundred thousand accounts in a day. You could not even buy food for your family. Not only accounts but any assets can be seized by the taxman without court order. It would be enough to publicise a few cases and the whole tax boycott would collapse.

It’s a sad indictment – unemployment, mainly as a result of the poorest education on earth, and now corruption, that is stealing our hard-earned tax money, has lead to a predatory tax regime in SARS desperate to grab money from every possible angle while losing complete focus on the bigger picture.

This now extends to a loss of even more skills that otherwise might just have been able to contribute to our economy. Alas, endless commissions of enquiry and hearings with hardly any attempt to freeze the stolen billions swept away by a corrupt Government and their helpers, such as the Gupta’s, means the billions will never be recovered, which our beloved country simply cannot afford.

It’s beyond all comprehension but take a look at this while you ponder:

I think financial assets are emigrating at a rapid pace now and it is evident from the FNB survey that fixed property sales are also accelerating due to emigration. Down scaling is the biggest reason for selling property but what it does not show is that lost of people are down scaling in preparation of emigrating. Sell the big property, ( reduce risk) get the money out and stay in something small for the next couple of years until finally emigrating.

It is noticeable with cars as well. Many people these day’s drive cheap small cars.

I see it all over that people are preparing for the inevitable need to get out.

No man -Emigrate the Gupta way!!

Load all your cash on a plane and leave your debt in SA !!!

I heard about a family who maxed out their credit cards, got the maximum bond on their house and moved to the UK. They got jobs without any problem (they had EU passports) but when a few weeks later they applied for a credit card the bank refused because their debt in SA was on some kind of database.

‘A person that emigrates must prove that they are no longer ordinarily resident in South Africa if they want to be treated as a non-resident for tax purposes.’

Utter nonsense. You can still be ordinarily resident in SA and be non-resident for tax purposes by way of a DTA. The CGT implications are the same and there are a number of assets that are excluded that the writer doesn’t refer to eg. Endowments, personal use assets etc.

What a sad article to have to write. People want to run out of South Africa at enormous cost, risk and personal change. What an indictment on Mandelas legacy.

But SAM cant blame the youngsters or rich folk who are fleeing in terror. Crime, Corruption , Bust SOEs, Poor health system, high unemployment, no growth, EWC, racial hatred, dirt, high taxes….why stay? Weather, family and friends keep old folk like me here!!

End of comments.





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