Returning to South Africa? What you need to know about your tax position

For many South Africans returning home, the move involves more than reconnecting with friends and family or settling into a new home. It also means understanding how your income, investments and assets will fit back into the South African tax system.

1. Determining your tax residency status in SA

Your tax residency status in South Africa is the first and most important step when returning home. It determines whether SARS will tax your worldwide income or only your South African-sourced income.

There are two main ways residency is assessed:

• The Ordinarily Resident test: You may be considered a tax resident if South Africa is your primary home or you return with the intention of making it your permanent home.
• The Physical Presence test: If you have spent more than 91 days in South Africa in the current year, and 91 days in each of the previous two years, you may be classified as a tax resident.

By consulting a tax professional, you can easily determine your status, ensuring you're compliant from the get-go and avoiding any unnecessary surprises.

2. How South Africa taxes returning expats

When you resume tax residency in South Africa, SARS taxes residents on income earned both locally and internationally. Understanding this early allows you to understand your position early.

For example:

• If you continue working for a foreign employer, your salary will generally be taxed in South Africa.
• If you hold overseas assets or property, careful planning ensures any capital gains are calculated efficiently. Obtaining a formal valuation before your return can help.

South Africa also has double taxation agreements (DTAs) with many countries. These agreements determine which country has the primary taxing rights on your foreign income and prevent double taxation on pensions, salaries, interest or dividends. Using DTAs effectively ensures you won’t pay more than you legally owe.

3. Foreign tax-free investments

Many foreign tax-free investments, such as UK ISAs, do not retain the same tax-free status once you become a South African tax resident. Income or gains from these investments may become taxable in South Africa.

Reviewing these investments before or shortly after your return allows you to plan ahead, restructure where necessary, and support your long-term financial goals while staying fully compliant with SARS.

4. Overseas assets and Capital Gains Tax

When you resume South African tax residency, your overseas assets are rebased for tax purposes.

This means their market value on the date you become a tax resident again becomes the new base cost for future Capital Gains Tax.

Example: If you purchased property abroad and keep it when you return, any future capital gain is calculated from its value on the date you resumed South African tax residency, not the original purchase price.

Obtaining formal valuations before your return ensures accurate records for future tax reporting.

5. Retirement planning

If you’ve contributed to a pension or retirement fund abroad, it is important to understand how these savings will be treated for South African tax purposes when you return.

Under current laws, foreign pensions usually qualify for an income tax exemption from South African taxes. As most double-taxation agreements for pension or annuity income award taxing rights to the country of residency, this could result in double-non-taxation if planning is done correctly.

See also: Foreign pension tax exemption in South Africa safe…for now

By reviewing your retirement savings strategy with an expert, you can ensure your retirement funds are working as hard as possible for you, and you’re not missing out on any tax-saving opportunities.

6. Key steps to manage your tax return to South Africa

SARS currently has a straightforward process for returning residents, but taking practical steps ensures everything is correctly recorded:

• Obtain proof of foreign tax residency – Secure a letter or certificate confirming your status abroad.
• Document your South African tax residency position – Keep clear records explaining which test applies to you and why.
• Record your assets on the date of tax immigration – List all global assets with supporting evidence.
• Consider ring-fencing offshore assets – Helps with future estate planning and wealth structuring.
• Save your RAV01 records – Capture screenshots showing your non-resident status and the date your South African tax residency resumes.

Returning to South Africa affects your income, assets and investments. Get clarity on your tax residency and offshore finances before you move. Speak to our cross-border tax specialists today at [email protected] or call +27 (0) 21 657 1517 to get started.