Question 1

What is the emigration exit tax?

Accepted Answer

When you financially emigrate from South Africa, SARS treats it as if you sold all your worldwide assets on the day you leave. You then pay capital gains tax (CGT) on any profit above your cost base. This is called the 'exit charge' or 'deemed disposal'. It applies to property, investments, retirement funds, and other assets.

Question 2

What is the capital gains tax rate?

Accepted Answer

For individuals, 40% of your capital gain is included in your taxable income. At the maximum marginal tax rate of 45%, this means an effective CGT rate of 18%. So for every R1 million in capital gains, you'd pay approximately R180,000 in tax (after the R40,000 annual exclusion).

Question 3

Is my primary residence included?

Accepted Answer

Your primary residence gets a R2 million exclusion on capital gains. So if your house gained R3 million in value, only R1 million is subject to CGT. If the gain is under R2 million, you pay nothing on the house.

Question 4

Do I have to pay immediately?

Accepted Answer

No, you can apply to SARS for a payment arrangement. Some people pay over 3-5 years. However, SARS will charge interest on outstanding amounts. It's best to settle as quickly as possible or negotiate a realistic payment plan before you leave.

Question 5

What about my retirement annuity?

Accepted Answer

If you financially emigrate, you can withdraw your RA after 3 years of non-residency. The withdrawal is taxed according to the retirement lump sum tax table (first R550,000 is tax-free, then rates from 18% to 36%). This is separate from the exit tax on other assets.

Question 6

Do I still need to file tax returns after leaving?

Accepted Answer

Yes, until SARS confirms your non-resident status. You must file for the year of departure and potentially the following year. After that, you only need to file if you earn South African-sourced income (like rental income from SA property).

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