SARS Expat Tax in South Africa (2026) — Residency Tests, s10(1)(o)(ii) & Exit Charge

Reviewed & Verified

Written by the Independent Editorial Team · Reviewed & Verified by Solly Maanaso, CA(SA)

South Africa operates a residence-based tax system — meaning South African tax residents pay tax on their worldwide income, regardless of where it is earned. If you are a South African living or working abroad, your tax obligations depend entirely on whether you are still considered a tax resident by SARS. Getting this wrong can result in double taxation, penalties, or unexpected tax debt.

Still a SA tax resident working abroad

You work overseas but have not formally ceased residency with SARS. The R1.25m foreign employment income exemption may apply.

Jump to: Foreign income exemption →

Want to formally stop being a SA tax resident

You want to formally break your tax ties with South Africa through SARS's cessation process.

Jump to: How to cease residency →

Already a SA non-resident

You have already ceased SA tax residency. You are taxed only on SA-source income.

Jump to: Non-resident tax obligations →

Professional advice strongly recommended. Expat tax involves complex interactions between South African law, foreign tax law, and double taxation agreements. This guide provides accurate general information, but individual circumstances vary significantly. Consult a registered tax practitioner with international tax experience before making decisions about your tax residency status.

JUMP TO: Tax residency tests s10(1)(o)(ii) exemption How to cease residency CGT exit charge Non-resident obligations DTAs FAQ

South Africa's residence-based tax system

South Africa uses a residence-based tax system. South African tax residents pay income tax on their worldwide income — regardless of where it is earned, and regardless of whether the money is brought into South Africa. Non-residents pay tax only on income derived from South African sources.
Source: Income Tax Act 58 of 1962, Section 1; SARS — sars.gov.za/individuals/tax-during-all-life-stages-and-events/tax-and-non-residents/

If you are still a SA tax resident: Your foreign salary, rental income, investment returns, and any other income earned abroad are in principle subject to South African income tax. The s10(1)(o)(ii) exemption and foreign tax credits (Section 6quat) provide relief, but you must still file an annual ITR12.

If you are a non-resident: Only income from South African sources (SA property rent, SA dividends, SA-based employment) is taxed in South Africa. Income earned entirely abroad is not subject to South African tax.

Why this matters: Many South Africans living abroad mistakenly believe they have no South African tax obligation once they leave. Without formally ceasing tax residency through SARS's process, you remain a tax resident — and all worldwide income remains taxable in South Africa.
Source: SARS — Tax and Non-Residents — sars.gov.za

Are you still a South African tax resident?

SARS determines your tax residency using two sequential tests, applied in strict order:

The Ordinarily Resident Test is applied first
If you fail that test, the Physical Presence Test is applied

You are a SA tax resident if you pass either test. Both must be failed to be a non-resident.
Source: SARS — sars.gov.za/individuals/tax-during-all-life-stages-and-events/tax-and-non-residents/

TEST 1

Ordinarily Resident Test

You are ordinarily resident in South Africa if South Africa is the country to which you naturally and as a matter of course return after your wanderings — your real home, your centre of life.

This test is subjective — not a day count. SARS considers:

Where your spouse and minor children live
Where you own property
Where you work and do business
Where your social and family ties are
Your long-term intention — do you intend to return to South Africa?

Key point: A South African citizen living in Dubai for five years, paying school fees in Dubai, and owning an apartment there, but with no plan to permanently leave South Africa, may still be considered ordinarily resident in South Africa.

TEST 2

Physical Presence Test

If SARS does not consider you ordinarily resident, the physical presence test is applied. This is objective — based entirely on the number of days you are physically present in South Africa.

Requirement	Threshold
Current tax year	> 91 days in SA
Each of the 5 prior years	> 91 days per year
Aggregate 5 years	> 915 days total

All three conditions must be met simultaneously.

Day-counting rules:

The day of arrival AND the day of departure both count as days in SA
Time in transit through SA (without formally entering) does not count

Automatic ceasing under the physical presence test:
A person who qualifies as resident under the physical presence test automatically ceases to be a resident from the day they leave South Africa if they are subsequently absent for a continuous period of at least 330 full days.
Source: SARS — sars.gov.za/individuals/.../tax-and-non-residents/

The role of Double Taxation Agreements (DTAs):
Even if you pass one of the above tests, a DTA between South Africa and your new country of residence may deem you exclusively resident in the other country. Where a DTA applies, it takes precedence over the domestic tests and can override SARS's residency determination.
Source: FinGlobal; PwC Tax Summaries — South Africa — Residence

Still a SA tax resident working abroad? The s10(1)(o)(ii) exemption

This exemption is for South Africans who are still SA tax residents but work abroad. It does NOT apply to non-residents. If you have formally ceased tax residency, you do not need this exemption — your foreign income is simply not subject to SA tax.

What does the exemption do?

Section 10(1)(o)(ii) of the Income Tax Act 58 of 1962 allows qualifying SA tax residents to exclude up to R1,250,000 of foreign employment income per year of assessment from South African income tax.

Income above R1,250,000 is taxable in South Africa at your marginal rate (with a Section 6quat foreign tax credit if you paid tax abroad on the excess).

The cap has applied since 1 March 2020 and has not been changed by Budget 2026.

Who qualifies? (All conditions must be met)

All conditions must be met:
Condition	Requirement
Tax residency	You must be a South African tax resident
Employment type	You must be an employee — independent contractors do not qualify
Days outside SA — period	You must have spent more than 183 full days outside SA in any 12-month period
Days outside SA — consecutive	Of those 183+ days, at least 60 must be consecutive
Income type	Only income earned while physically working outside South Africa qualifies

Source: Income Tax Act 58 of 1962, Section 10(1)(o)(ii); SARS Interpretation Note 16 (Issue 3)

Critical distinctions:

The 183/60 day rule is for the exemption — it is separate from the physical presence test for residency
Passing the 183/60 day rule does not make you a non-resident — you remain a SA tax resident
Self-employed individuals and independent contractors do not qualify for this exemption
The R1.25 million threshold cannot be averaged across years — it applies per year of assessment

How the exemption and Section 6quat interact

If your foreign employment income exceeds R1,250,000, the excess is taxable in South Africa. If you have already paid foreign tax on that excess in the country where you work, Section 6quat of the Income Tax Act allows you to claim a foreign tax credit — reducing your South African tax liability by the foreign tax paid (subject to limits).

Your employer can apply to SARS for a tax directive under paragraph 10 of the Fourth Schedule to reduce monthly PAYE withholding to account for the Section 6quat credit in real time.

Worked example:

Foreign employment income	R2,000,000
s10(1)(o)(ii) exemption	(R1,250,000)
Taxable in South Africa	R750,000
Tax on R750,000 (at marginal rate ~36%)	~R270,000
Less: Section 6quat foreign tax credit	(R180,000 example)
SA tax payable after credit	~R90,000

Illustrative only. Actual credit depends on foreign tax paid and applicable DTA. Obtain professional advice.

Documents you must keep:

Employment contract (confirming employee status and foreign posting)
Passport with entry/exit stamps (to verify days outside SA)
Foreign payslips (to confirm foreign income earned while outside SA)
Foreign tax certificates/assessments (for Section 6quat credit)

How to formally cease South African tax residency

Formally ceasing tax residency changes your status with SARS from "resident" to "non-resident". From the date of cessation, you are only taxed on South African-source income. This is not automatic — it requires a formal application to SARS, and triggers a CGT exit charge on all worldwide assets.

Financial emigration (changing your exchange control status with the SARB) is no longer the mechanism for ceasing tax residency. Since 1 March 2021, financial emigration and tax residency cessation are separate processes. If you completed financial emigration before March 2021, confirm your tax residency status separately with SARS.

The SARS cessation of residency process (step by step)

Establish that you qualify to cease Either:

You are no longer ordinarily resident in South Africa (your real home, family, and life are now genuinely elsewhere), OR
You qualify as exclusively resident in another country under a DTA, OR
You have been physically outside South Africa for ≥330 consecutive full days (physical presence test only)

Update your RAV01 form on eFiling

Log into SARS eFiling
Navigate to your taxpayer registration (RAV01)
Update your residential address and tax residency status
This triggers SARS to request supporting documents

Submit supporting documentation SARS typically requires:

A signed "Cessation of Residency Declaration Form" (SARS form)
Proof of foreign residency (foreign tax registration, visa, foreign address)
Evidence of establishing your life abroad (lease agreements, bank accounts, foreign employment contract)
Passport copies showing departure date and absence from SA

SARS review and confirmation

SARS reviews the submission and issues a formal "Notice of Non-Residency Status" letter
This letter is essential documentation — retain it

File your final resident ITR12

For the tax year in which you cease residency, you must file an ITR12 covering the resident period
The CGT exit charge must be included in this return

New from July 2025

Reinstatement notification also required

SARS introduced a new requirement in July 2025: taxpayers who return to South Africa and reinstate their tax residency must now formally notify SARS of this change. This is a new obligation — expats who return to South Africa must update their status with SARS proactively.
Source: Vialto Partners (citing SARS, July 2025)

After cessation — what changes?

Before cessation (SA resident)	After cessation (non-resident)
Taxed on worldwide income	Taxed only on SA-source income
Must file annual ITR12	May still need to file ITR12 if SA-source income exists
s10(1)(o)(ii) exemption may apply	s10(1)(o)(ii) exemption no longer needed (foreign income not taxable)
Full SA tax bracket table applies to all income	Withholding taxes apply to SA-source dividends and interest
Retirement annuity funds: locked until age 55	Retirement annuity funds: accessible after 3 years as non-resident

Source: SARS; TaxTim (RA access rule post-March 2021)

The CGT exit charge — what happens when you leave

When you formally cease to be a South African tax resident, Section 9H of the Income Tax Act deems you to have disposed of all your worldwide assets at market value on the date of cessation. This triggers capital gains tax on any unrealised gains across your asset portfolio — even if you have not actually sold anything.

Included in deemed disposal

Shares and unit trusts (worldwide)
Foreign property and investments
Cryptocurrency holdings
Business interests held abroad

Excluded from deemed disposal

South African immovable property — remains in the SA tax net regardless; CGT triggered when actually sold
South African permanent establishment assets

Why this matters: An expat with a large offshore share portfolio or business interests accumulated over many years may face a significant CGT liability on cessation — even if the assets remain untouched. The CGT annual exclusion (R50,000 for 2026/2027) applies, and the primary residence exclusion (R3,000,000) applies to a qualifying SA primary residence if it is included in the deemed disposal.

Planning consideration: The CGT exit charge can be mitigated by advance planning — for example, timing the cessation date carefully, managing asset values in the year of departure, or using retirement fund structuring. Professional advice before ceasing residency is strongly recommended.

Already a non-resident? Your South African tax obligations

Once you are a non-resident, you are taxed in South Africa only on income from South African sources. Here is what that means in practice.

South African income that remains taxable for non-residents:

Income type	Tax treatment
Rental income from SA property	Taxed as normal income under SA income tax brackets; file ITR12
SA-source interest income	Withholding tax at 15% (Non-Resident Tax on Interest — NRST) if not physically present in SA for >183 days
Dividends from SA companies	Dividends tax at 20% withheld at source (or reduced by DTA)
Capital gains on SA immovable property	CGT applies when property is actually sold; s35A withholding tax may apply
Employment income from SA employer	PAYE withholds at normal rates if services rendered in SA

What is NOT taxable for non-residents:

Income from employment performed entirely outside South Africa
Foreign interest, dividends, and investment income
Capital gains on foreign assets

Retirement fund access: As a non-resident, you can access your South African retirement annuity funds after 3 consecutive years of non-residency. This is a significant change from the pre-2021 rules when financial emigration was the trigger.
Source: TaxTim — Tax & Retirement (confirmed rule)

Double taxation agreements — what they mean for SA expats

South Africa has concluded double taxation agreements (DTAs) with more than 80 countries. These agreements take precedence over domestic South African tax law in certain circumstances and are essential tools for managing expat tax obligations.

What DTAs do:

Determine exclusive tax residency If you are resident in both SA and another country under domestic law, the DTA "tie-breaker" rules determine which country has exclusive residency rights. If the DTA deems you exclusively resident in the other country, SARS generally cannot tax your foreign income as a resident.

Reduce withholding tax rates Many DTAs reduce the standard SA withholding rates on dividends (normally 20%), interest (normally 15%), and royalties paid to non-residents. The reduced rates only apply if you claim them — they are not automatic.

Provide relief from double taxation Where both SA and the other country have the right to tax the same income, the DTA specifies which method is used (exemption or credit) to relieve the double burden.

Most relevant DTAs for SA expats (indicative — always verify current status):

United Kingdom United States Australia UAE* Germany Netherlands Canada Mauritius Singapore

* UAE DTA has limited scope as UAE historically had no income tax

Important caveat: DTAs must be claimed — they do not apply automatically. You must actively invoke the relevant DTA provisions on your SA tax return and retain documentation. Seek professional advice to correctly apply DTA provisions.

Frequently Asked Questions

It depends on your tax residency status. If you are still a South African tax resident (under the ordinarily resident test or physical presence test), you are taxed on your worldwide income in South Africa, though the s10(1)(o)(ii) exemption may shelter up to R1.25 million of foreign employment income. If you have formally ceased SA tax residency, you are only taxed on income from South African sources (property, dividends, interest earned in SA).

The Section 10(1)(o)(ii) exemption allows qualifying South African tax residents working abroad to exclude up to R1,250,000 of foreign employment income from South African tax per year. To qualify, you must be an employee (not a contractor), spend more than 183 days outside South Africa in any 12-month period (with at least 60 consecutive days), and perform services outside SA. The exemption has been capped at R1.25 million since 1 March 2020.

SARS applies two sequential tests. The ordinarily resident test is first — if South Africa is your real home (where you naturally return, where your family lives, where your life is centred), you are ordinarily resident regardless of where you currently are. If not, the physical presence test applies — you are a tax resident if you spent more than 91 days in SA in the current year, more than 91 days in each of the prior 5 years, and more than 915 days in total in those 5 years. If you fail both tests, you are not a SA tax resident.

Since March 2021, you must complete a formal cessation process with SARS: update your RAV01 registration on eFiling, submit a Cessation of Residency Declaration Form, and provide supporting documents proving your residency abroad. SARS will then issue a Notice of Non-Residency Status. This process also triggers a CGT exit charge on your worldwide assets. Financial emigration (the previous SARB process) is no longer the mechanism for ceasing tax residency.

When you formally cease to be a South African tax resident, Section 9H of the Income Tax Act deems you to have disposed of all your worldwide assets at market value on the date of cessation, triggering capital gains tax on unrealised gains. South African immovable property is excluded — it remains in the SA tax net until actually sold.

No. The 183-day rule (183 days outside SA in a 12-month period, including 60 consecutive days) determines eligibility for the s10(1)(o)(ii) foreign employment income exemption only. It does not affect your tax residency status. You remain a SA tax resident unless you formally cease residency through the SARS process.

Yes. Non-residents are taxed on income from South African sources. Rental income from South African property is taxed at normal income tax rates and must be declared. Capital gains on the sale of South African property are also taxed.

Yes — but only after you have been a non-resident for 3 consecutive years. This rule applies since the March 2021 changes that decoupled financial emigration from tax emigration. After 3 years of non-residency, you may request your RA fund administrator to release the funds, subject to a tax directive from SARS.

A double taxation agreement (DTA) is a treaty between South Africa and another country that prevents the same income being taxed in both countries. For expats, a DTA can: determine which country has exclusive tax residency; reduce SA withholding tax rates on dividends and interest; and specify how double taxation is relieved (by exemption or credit). DTAs must be actively claimed — they do not apply automatically.

No. Ceasing South African tax residency is a tax administration process with SARS and has no effect on your South African citizenship or your right to hold a South African passport. Citizenship is governed by the South African Citizenship Act 88 of 1995 and is completely separate from your tax status.

Related guides

Taxes & Compliance

Wealth & Transfers

Tools & Resources

Sources and references

All expat tax and non-residency information on this page is sourced from, or verified against, the following official and authoritative references:

Income Tax Act 58 of 1962 — Primary legislation governing tax residency and exemptions
SARS — Tax and Non-Residents — sars.gov.za/individuals/tax-during-all-life-stages-and-events/tax-and-non-residents/
SARS Interpretation Note 4 (Issue 5) — Resident: Definition in Relation to a Natural Person — Physical Presence Test
SARS Interpretation Note 16 (Issue 3) — Foreign Employment Income Exemption (Section 10(1)(o)(ii))

Last reviewed May 2026 by Solly Maanaso, CA(SA). Next review: after Budget Speech February 2027.