Authors: Rizquah Mohamed and Mbuyisile Nukeri
Relocating abroad is a physical event. Becoming non-resident for South African tax purposes is a legal and tax event, and the two do not necessarily happen at the same time.
While many taxpayers focus on the move itself, formally becoming non-resident requires engagement with SARS and careful consideration of the resulting tax implications.
This article, the third in our Navigating Tax Residency Cessation series, focuses on the practical process of formalising non-resident status with SARS and highlights one of the most significant tax consequences that may arise: the potential application of section 9H of the Income Tax Act.
For many years, taxpayers commonly referred to the process as “financial emigration”. However, financial emigration, as administered through the South African Reserve Bank (“SARB”), was phased out with effect from 1 March 2021. While exchange control considerations may still arise when funds are transferred offshore, the formalisation of non-resident tax status is now primarily a tax process administered by the South African Revenue Service (SARS).
