Tax residency determines the scope of South Africa’s claim on your income. A South African tax resident is taxed on their worldwide income - wherever earned and wherever received. A non-resident is only taxed on income sourced within South Africa (SARS: Tax Residency, 2024). Getting this right matters whether you are leaving South Africa, living abroad, or returning after years away.
Key Takeaways
- Two routes to South African tax residency: ordinarily resident (intent-based) or physical presence (day-count test).
- Ordinarily resident: South Africa is the country you intend to return to as your permanent home.
- Physical presence: 91+ days in the current year, 91+ days in each of the 5 preceding years, 915+ days total across those 5 years.
- Tax residents are taxed on worldwide income; non-residents only on South African-source income.
The two tests for tax residency
South Africa uses two separate tests. Satisfying either test makes you a South African tax resident (SARS: Tax Residency).
1. Ordinarily resident test
A person is ordinarily resident in South Africa if South Africa is the country to which they naturally and normally return - the place they regard as their settled, permanent home (Income Tax Act 58 of 1962). This is an intent test, not a day count. South African courts have applied this test for decades, and SARS looks at the facts of where a person’s real home is.
Factors SARS considers:
- Where do you intend to return after temporary absences, business trips, or work abroad?
- Is accommodation available for permanent occupation in South Africa?
- Where are your closest personal and economic ties - family, property, bank accounts, social connections?
- Have you established a genuine and permanent home elsewhere?
A person who has emigrated, acquired property abroad, moved their family, and has no fixed home remaining in South Africa may no longer satisfy this test. But a person who “lives abroad” for work while maintaining a South African home and intending to return likely still does.
2. Physical presence test
If you are not ordinarily resident, you may still become a tax resident if you are physically present in South Africa for (legislation.gov.za):
- More than 91 days in the current year of assessment, and
- More than 91 days in each of the five preceding years of assessment, and
- More than 915 days in total during those five preceding years.
All three conditions must be met simultaneously. If you break the 91-day threshold in any year, the five-year count resets for that year. The count is days actually present in South Africa - days abroad don’t count toward the test.
Important: if you were physically present but ordinarily resident elsewhere - for example, visiting family - you would be caught by the physical presence test even without a permanent home in South Africa if the day counts are met.
What residency means for your tax return
| Status | South African income | Foreign income |
|---|---|---|
| Tax resident | Taxable in South Africa | Taxable in South Africa (subject to exemptions and foreign tax credits) |
| Non-resident | Taxable in South Africa | Not subject to South African tax |
South African residents earning foreign employment income may qualify for the section 10(1)(o)(ii) foreign employment income exemption - currently capped at R1.25 million per year - if they meet the 183/60 day test. This exemption does not apply to non-residents.
Ceasing tax residency
To cease being a South African tax resident, you must no longer satisfy either test. Key consequences:
- Deemed disposal under section 9H of the Income Tax Act: most worldwide assets are treated as sold at market value on the date residency ceases, which can trigger a CGT liability (the exit tax).
- SARS notification: you must declare the cessation on your eFiling profile and reflect it on your final South African tax return for that year.
- Ongoing South African obligations: after ceasing residency, you may still need to file South African returns if you continue to earn South African-source income such as rental income, certain interest, or a South African pension.
Ceasing tax residency is a significant legal step - the deemed disposal at cessation can create a material tax liability. Professional advice before making any declaration to SARS is strongly recommended.
Double tax agreements (DTAs)
South Africa has double taxation agreements with many countries (SARS: DTAs). If you are considered tax resident under the domestic tests of both South Africa and another country simultaneously, a DTA tiebreaker clause may determine which country has the primary right to tax your income.
DTA tiebreakers typically look at: where you have a permanent home available; the location of your centre of vital interests; habitual abode; and nationality - in that order. DTAs override domestic tax law and can reduce or eliminate South African liability for specific types of income.
Common misunderstandings
Citizenship and passports are irrelevant. South African citizenship or passport status does not determine tax residency. A South African citizen who has permanently settled abroad and has no intention of returning may not be ordinarily resident.
Years abroad don’t automatically end residency. A person can be physically absent from South Africa for five or ten years and still be ordinarily resident if they maintain a home and intention to return.
Foreign immigration status is irrelevant. Holding a permanent residency permit or work visa in another country does not end South African tax residency.
Frequently Asked Questions
Can I be a South African tax resident even if I live abroad?
Yes. The ordinarily resident test is based on where your permanent home is and where you intend to return - not on physical presence. If South Africa is still your settled home and you intend to return, you are likely ordinarily resident and taxed on worldwide income, even if you have been abroad for several years.
How does the physical presence test work for South African tax residency?
You satisfy the physical presence test if you are present in South Africa for more than 91 days in the current tax year AND more than 91 days in each of the five preceding years AND more than 915 days total across those five preceding years. Breaking any part of the test in a given year resets that year’s count.
What happens to my assets when I cease to be a South African tax resident?
When you cease residency, section 9H of the Income Tax Act deems all worldwide assets (except South African immovable property) to have been disposed of at market value on the date of cessation. The resulting capital gain is included in your taxable income for that year at the standard 40% inclusion rate. South African property is excluded from the deemed disposal but remains subject to South African CGT on actual sale.
Do I still have to file South African tax returns after I cease tax residency?
Possibly. After ceasing residency, South African-source income such as rental income from a South African property, certain interest from South African banks, dividends from South African companies, and South African pension income remains subject to South African tax. You may need to file annual returns for this income as a non-resident.
Sources
- SARS: Tax Residency - the two tests, notification process, and guidance on ceasing residency
- Income Tax Act 58 of 1962, sections 1 (definition of “resident”) and 9H - legislative basis for both tests and the exit deemed disposal
- SARS: Double Taxation Agreements - full list of countries and DTA provisions
Related guides
- Ceasing Tax Residency in South Africa: What It Means
- South African Expat Tax: What Residents Working Abroad Must Know
- Double Taxation Agreements Explained for South Africans
- Exit Tax in South Africa: What to Check Before Leaving
Tax residency is a complex area where the specific facts matter greatly. Verify your position with a registered tax practitioner or legal adviser before making any changes or declarations to SARS.