Part 1: SARS Raises the Bar on Tax Residency Cessation
By Rizquah Mahomed and Mbuyisile N.
For many South Africans living and working abroad, there is a common assumption that leaving the country means leaving the South African tax net.
Increasingly, SARS is making it clear that this is not necessarily the case.
The cessation of South African tax residency has become one of the most scrutinised areas of cross-border taxation, with SARS adopting a far more technical, evidence-driven approach when assessing non-residency claims. What was once viewed by many taxpayers as a largely administrative process has evolved into a substantive tax determination requiring careful legal analysis and robust supporting evidence.
This shift is not entirely unexpected. Over the past few years, SARS has consistently signalled its intention to strengthen compliance and improve visibility over internationally mobile taxpayers. The 2026 filing season provides further evidence of this focus, with enhanced residency-related disclosures and guidance incorporated into the ITR12 process. Taxpayers are now required to provide more detailed information regarding changes in residency status, and the information supplied may influence whether SARS presents a resident or non-resident return for completion.
Importantly, the process for declaring a change in tax residency has not materially changed. Taxpayers must still update their status through the RAV01 form on eFiling, often followed by a verification process and requests for supporting documentation. What appears to have changed, however, is the depth of scrutiny being applied to the underlying facts.
A common misconception is that spending more than 183 days outside South Africa, or relocating overseas for employment, automatically results in the loss of South African tax residency. In reality, residency is determined through the application of specific legal tests, including the ordinarily resident test, the physical presence test and, where applicable, the provisions of a Double Tax Agreement (DTA).
The outcome is highly dependent on the taxpayer’s individual circumstances.
It is therefore entirely possible for a person to live and work abroad for several years while remaining a South African tax resident.
Particular attention is being given to taxpayers relying on DTAs to support their non-resident status. In these cases, the relevant question is often not when the taxpayer physically left South Africa, but when they satisfied the treaty requirements to be regarded as exclusively resident in another jurisdiction. This requires a detailed analysis of the treaty tie-breaker provisions and the facts supporting the taxpayer’s position.
Recent SARS verification requests suggest an increasing focus on substance over form. Taxpayers may be required to demonstrate where their life is genuinely centred by providing evidence relating to family location, employment arrangements, immigration status, accommodation, financial interests and personal connections both within and outside South Africa.
This reflects a broader shift in approach.
SARS is no longer looking simply at where a taxpayer has travelled. It is increasingly focused on where that taxpayer lives, works, maintains economic interests and intends to return.
The consequences of getting this wrong can be significant.
The cessation of tax residency is not merely a disclosure exercise. Section 9H of the Income Tax Act may trigger a deemed disposal of certain worldwide assets immediately before residency ceases, potentially giving rise to a capital gains tax liability. Equally important is the determination of the correct cessation date. Where SARS disputes the timing or basis of a taxpayer’s non-residency position, the taxpayer may remain subject to South African tax on worldwide income, including foreign employment income, offshore investment returns, foreign rental income and certain foreign capital gains.
For South Africans abroad, the message is becoming increasingly clear: physical relocation alone is not enough.
As SARS continues to refine its approach to tax residency, taxpayers should expect greater scrutiny, higher evidentiary standards and a stronger focus on the legal substance supporting non-residency claims.
At Arro, we assist individuals, executives and internationally mobile families in navigating the complexities of tax residency cessation. From assessing the legal basis for non-residency to managing SARS engagements and implementing practical cross-border tax solutions, our focus is on helping clients approach these decisions with confidence and clarity.
Leaving South Africa may be straightforward. Leaving the South African tax net is often more complex.
If you are considering a change in tax residency, contact the Arro team at lauren@arro.co.za or visit www.arro.co.za.
