How to Cease Tax Residency in South Africa and the Exit Charge

To cease South African tax residency you notify SARS by capturing the date of cessation on the RAV01 form on eFiling and submitting the "Cease to be a tax resident" declaration with supporting documents. On the day before you cease, section 9H deems you to have disposed of your worldwide assets at market value, which triggers a capital gains tax exit charge on the built-in gains to that date. After you cease, SARS taxes you only on South African-source income, not on your worldwide income.

This is a separate matter from the foreign-employment income exemption in section 10(1)(o)(ii). That exemption applies while you are still a resident. Ceasing residency ends the resident status itself.

Step one: notify SARS on the RAV01

You tell SARS you have ceased by capturing the date of cessation on the RAV01 (Registration, Amendments and Verification) form on eFiling, then submitting the "Cease to be a tax resident" declaration. SARS lists the supporting documents it wants: a signed declaration, a letter of motivation setting out the facts and circumstances, and a copy of your passport showing the entry and exit stamps.

The exact documents depend on the basis of cessation. There are three routes out:

• You stop being ordinarily resident (a common-law facts-and-circumstances test).
• You break the physical presence test, the day-count test that applies to a person who is not ordinarily resident.
• A double taxation agreement (DTA) tie-breaker allocates residence to the other country.

Your letter of motivation should match whichever basis applies, because SARS assesses the facts against that basis.

Step two: the section 9H exit charge

Section 9H deems you to have disposed of your worldwide assets at market value on the day before you cease to be a resident, and to have reacquired them the next day at that same value. The deemed disposal is a capital gains tax event on the gains that built up to the date of cessation. The reacquisition at market value resets the base cost, so gains after you leave are outside the SA net.

One category is excluded from the deemed disposal: immovable property situated in South Africa. Your SA house or land stays in the South African CGT net and is taxed on a later actual disposal, not on exit. Do not assume other assets are excluded beyond SA immovable property.

The normal individual CGT figures apply to the exit gain (2026 year of assessment):

• Annual exclusion: R40,000
• Inclusion rate: 40%
• Maximum effective rate: 18%

Pin the year of assessment. The 2026 YoA runs from 1 March 2025 to 28 February 2026. If you cease during that year, the 2026 figures above apply to the deemed disposal.

Worked example: a share portfolio and a house

You cease residency during the 2026 year of assessment. You hold a share portfolio with a base cost of R900,000 and a market value of R1,300,000 on the day before you cease. You also own a house in Cape Town.

Deemed gain on the shares:

• Market value less base cost: R1,300,000 − R900,000 = R400,000
• Less the annual exclusion: R400,000 − R40,000 = R360,000
• Taxable capital gain at the 40% inclusion rate: R360,000 × 40% = R144,000

That R144,000 is added to your taxable income for the year. If your marginal rate is 45%, the tax on the exit gain is:

• R144,000 × 45% = R64,800

Check the effective rate: R64,800 ÷ R360,000 = 18%, which is the maximum effective CGT rate for an individual. The arithmetic lands on the 18% ceiling because 40% × 45% = 18%.

Your Cape Town house is immovable property in South Africa, so it is excluded from the exit charge. No CGT arises on it when you cease. It is taxed only when you actually sell it later, using the CGT rules that apply at that time.

You can put your own numbers through the cross-border tax calculator to see the exit charge on your assets.

What changes after you cease

Once you have ceased, you are a non-resident for tax. SARS taxes you only on South African-source income, for example rent from an SA property or interest from an SA source, subject to any DTA. Your foreign salary and foreign interest fall away from the SA net from the day after cessation, because a non-resident is taxed only on South African-source income and salary and interest earned abroad are foreign-source. The section 9H reacquisition is a separate matter that bears only on capital gains: it reset the base cost of your retained assets to their market value on exit, so any future capital gain on those assets is measured from the exit value rather than your original cost.

Do not confuse ceasing residency with the foreign-employment income exemption. That exemption keeps you a resident and exempts the first portion of qualifying foreign employment income while you work abroad. If you are still a resident and working overseas, that is the exemption route, and working remotely for a foreign employer sits inside it. Ceasing residency is the harder break: it ends resident status and triggers the exit charge.