Five years after “financial emigration” was scrapped, many South Africans still aren’t clear on what officially cutting financial ties with home entails, with “Saffa” groups on social media endlessly debating what it means, how to go about it, and who has to do it.
Under the previous dispensation, managed by the South African Reserve Bank (SARB), you had to fill out an MP336 (b) form, and have it “attested” by your bank. Your South African assets were then placed into an Emigrant Capital Account (known informally as a “blocked account”), and you were essentially treated as a non-resident for exchange control purposes.
Every time you wanted to move your own money out of South Africa, you had to ask for permission and deal with a mountain of SARB paperwork.
That all changed on 1 March 2021, when it became a South African Revenue Service (SARS) process, now referred to as “Tax Emigration”. Today, when you cease tax residency, you notify SARS, and your bank then simply converts your account to a Non-Resident Account. In most cases, you retain your account number, online banking access, and usually your debit card. You can pay local bills, receive rent from your SA property, and move money between your own accounts without asking the SARB for permission. There are no more “blocked accounts.”
Here’s what the framework means in practice:
1. “High Income” means R1.25 million — and more than just salary
Under the Income Tax Act, foreign earnings up to R1.25 million per year are exempt from South African tax, but only if you remain a resident on SARS’s books.
That number includes more than your take-home pay: it means allowances and benefits, including housing, school fees, company cars, and bonuses, all count toward the threshold.
That means if you earn R3 million abroad while still a South African tax resident, SARS will tax R1.75 million of it at your marginal rate (up to 45%). Ceasing tax residency is the only way to legally stop SARS claiming that share.
2. What it doesn’t mean is that:
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“I’ll lose my citizenship.”
Reality: Ceasing tax residency affects your tax status, not your passport. -
“I can’t move back.”
Reality: You can return anytime; your tax residency simply resumes upon return. -
“It happens automatically.”
Reality: SARS doesn’t assume you’ve left and until you prove it in writing, you’re taxable on your worldwide income. -
“I must sell my South African assets.”
You can keep property and investments, but they’ll be taxed as South African-sourced income.
3. The “exit tax” – SARS’s final handshake
When you cease residency, SARS applies a deemed disposal: it treats you as if you’ve sold your worldwide assets when you left.
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Taxed: Global shares, offshore funds, cryptocurrency, and foreign property.
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Untouched: South African property (taxed when sold later) and retirement funds (taxed on withdrawal). South African immovable property remains excluded from the exit tax because SARS retains taxing rights on that physical land – regardless of where the owner lives.
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Cost: Capital Gains Tax up to an effective 18% on the growth of those “sold” assets.
4. The three-year lock on retirement funds
Your retirement annuity or preservation fund doesn’t become instantly accessible after leaving South Africa.
You must prove non-residency for at least three consecutive years before you can withdraw it. Here, timing is important because if you delay notifying SARS, it delays your three-year clock, effectively locking your funds for longer.
5. Lifestyle, family and financial intent are important
SARS looks beyond your payslip. Two tests determine your true tax home:
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Ordinarily Resident Test: Is South Africa still your ‘real’ base, where your family and personal belongings are?
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Physical Presence Test: A day-count test measured over a rolling five-year window, tracking how long you spend in the country.
You might cease residency if you’re abroad for five years or more, earn well above R1.25 million, and want to shield your global estate from South African estate duty (20–25%). But if your family remains or the “exit tax” outweighs the benefit, staying resident may make more sense.
6. The paperwork
Ceasing tax residency is a SARS-administered process, not a bank request.
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Step 1: Submit the RAV01 form via eFiling to update your tax status.
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Step 2: Provide supporting evidence, such as a declaration of non-residency, your new country’s Tax Residency Certificate, and proof of foreign residence.
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Step 3: For moving large sums abroad, apply for a Tax Compliance Status (TCS) pin for Approval for International Transfer (AIT). SARS issues it only after reviewing your exit tax and prior filings. The AIT replaced the old “emigration” and “foreign investment allowance” tax clearances in 2023. It is a more rigorous audit process where SARS cross-references your global asset declaration against previous returns.
“Ceasing tax residency” is about aligning your global finances with your new reality. For high earners abroad, the decision can save you from significant tax liabilities. But it demands foresight, clean paperwork, and assistance from the right experts to get right.
