Updating of SARS procedures when ceasing to be a tax resident

Determining a person’s tax residency status is a complex area of law and will depend on the facts and circumstances of each taxpayer and or family.  In many cases, it is also dependant on the domestic legislation in your new country of residency and the application of a Double Taxation Agreement (“DTA”).

Ceasing to be tax resident will also trigger a tax event that could result in an “exit tax being paid to SARS depending on your worldwide assets at the time of exit, a capital gains tax “exit charge” may have been due to SARS.

With the change in the rules from 1 March 2021, the concept of financial emigration (an exchange control concept) has now been scrapped with the process moving over to SARS.  The new rules were relatively clear in relation to emigrations taking place after 1 March 2021, but no clear procedure was followed by SARS where a person ceased to be a tax resident before 1 March 2021, without placing their tax or financial emigration on record at the time of departure.

Should you have ceased to be a tax resident prior to 2019 there was no formal process to notify SARS of ceasing to be a tax resident.  With effect from 1 June 2021, SARS have provided clarity..

Where a taxpayer is an active taxpayer still to place his tax emigration on record, when filing the income tax return for the year in which he ceased to be a tax resident, that taxpayer should “tick the box” on his current income tax return in the year that he ceased to be a tax resident.

Should you have ceased to be a tax resident in a previous year, and either filed your income tax per normal, or have been removed from SARS list of active income taxpayers, you are now able to complete a declaration to SARS to advise them accordingly.  SARS have issued a template declaration that can now be completed and submitted to SARS via email.

As part of this process you will need to provide SARS with a motivation letter confirming the following:

• Evidence of your formal relocation to your new country of residency;
• Copies of visa’s issued
• Confirmation of you being regarded as a taxpayer in your new country of residence; the circumstances surrounding your departure – including a tax residency certificate where applicable
• Confirmation of your worldwide assets and the time you departed (if this was after 1 October 2001) providing confirmation that all taxes were paid at the time of departure.
• If ceasing to be a tax resident in terms of the application of a DTA, SARS will also require supporting evidence of when you met such criteria.

The area of ceasing to be a tax resident is a complex area and is not always on the date a person bought a plane ticket.  We would always strongly urge that you obtain professional tax advice if you think this is you before advising SARS accordingly.

Copy of new declaration to be completed here.

02/07/2021