South Africans who move overseas often assume that living abroad for a few years is enough to end their South African tax residency. It isn’t. The South African Revenue Service (SARS) determines tax residency using two separate tests — the “ordinarily resident” test and the “physical presence” test — and both must be formally addressed before SARS will treat someone as a non-resident for tax purposes.
The “ordinarily resident” test looks at whether South Africa remains the country someone would naturally return to, based on the weight of their personal and economic ties, rather than simply where they happen to be living at a given moment. The “physical presence” test is a separate, day-count-based rule: someone can be deemed a South African tax resident under this test even if they are not “ordinarily resident,” based on the number of days they spend in South Africa over the relevant period. An individual only stops being a South African tax resident once they no longer meet either test — leaving the country physically is not, on its own, sufficient.
Until that formal cessation happens, worldwide income and certain gains can remain subject to South African tax, alongside whatever tax obligations arise in the new country of residence — creating a real risk of double taxation on income earned after the move, not just before it.
The residency question also has a direct financial consequence for retirement savings. According to South African Tax Guide, citing National Treasury, individuals who have formally ceased South African tax residency must wait three uninterrupted years from the date that cessation is recorded before SARS will approve a withdrawal of qualifying retirement annuity funds. Because that three-year clock only starts once residency has been formally addressed with SARS, delaying the paperwork also delays access to those funds — an emigrant who waits five years to notify SARS, for example, does not get credit for those years against the three-year wait.
The practical takeaway for anyone who has moved abroad, or is planning to: formally notifying SARS of the change in residency status is a distinct, necessary step — separate from visa, immigration or foreign tax-residency paperwork in the new country — and the earlier it is addressed, the earlier related clocks (such as the three-year retirement-fund rule) start running.
References
South African Revenue Service (SARS) – Tax and Non-Residents / South African Tax Guide – Emigrating? National Treasury Confirms 3 Years’ Wait to Access Retirement Funds
