SARS Is Coming After These Taxpayers who are Leaving the Country

SARS Is Coming After These Taxpayers who are Leaving the Country

Many South Africans believe that once they leave the country, SARS (the South African Revenue Service) can no longer reach them. However, that is a dangerous misconception. Moving abroad does not automatically free you from your tax obligations. You still need to finalise your tax affairs.
South Africa operates on a residency-based tax system, meaning that as long as you remain a tax resident, SARS can tax your worldwide income, even while you are living and earning abroad. To formally end that tax relationship, taxpayers should complete the process known as ceasing of tax residency, which changes their status to a non-resident for tax purposes.
If you leave without formally notifying SARS, several issues could arise. As you are still regarded as being a South African tax resident, SARS can request the submission of tax returns based on your worldwide income.
Ceasing of tax residency triggers a deemed disposal of worldwide assets, excluding property in SA. This is commonly referred to as the exit charge, i.e., CGT. One would take the market value of assets held on the day before leaving SA to determine the capital gains tax liability.
Unfortunately, the process is not as simple as just clicking a button. SARS requires supporting documents when applying for the cessation of tax residency, namely, a formal declaration, motivational letter, travel itinerary, and proof of tax residence abroad.
Therefore, to avoid unexpected issues, it is essential to plan properly before relocating. Plan your expected exit tax charge as well as the supporting documentation that will need to go to SARS.
Leaving South Africa without finalising your tax affairs can have lasting consequences. Proper tax planning and the cessation of tax residency ensure a clean break, giving you peace of mind and protecting you from future SARS enquiries.