SARS Exit Tax: What You’ll Pay When You Leave South Africa

SARS exit tax is a once-off capital gains tax bill you get when you officially stop being a South African tax resident. Here’s the basic idea: when you tell SARS you’re leaving for good, they pretend you sold everything you own the day before you left. Your shares, your ETFs, your crypto, your overseas property. All of it. They calculate the profit you would have made on each asset, and they tax that profit. You don’t actually sell anything. Nothing changes hands. But SARS calculates the gain and sends you a bill.

This is called a deemed disposal, and it’s governed by Section 9H of the Income Tax Act. Think of it as SARS’s way of collecting what they’re owed before they lose the right to tax your worldwide assets.

This guide explains exactly how SARS exit tax works, which assets get taxed, which ones don’t, how to calculate the bill, and what changed in the 2026 Budget.

How SARS Exit Tax Works (In Simple Terms)

While you’re a South African tax resident, SARS has the right to tax you on gains from your assets anywhere in the world. The moment you become a non-resident, that right goes away for most assets. So SARS wants to collect before you go.

Here’s what happens step by step:

1. You tell SARS you’re ceasing residency. You do this by updating your RAV01 form on eFiling and submitting supporting documents. For a full walkthrough of this process, see our guide to ceasing tax residency in South Africa.

2. SARS pretends you sold all your worldwide assets. They use the market value of each asset on the day before your residency ended. This is the “deemed disposal.”

3. SARS calculates the capital gain on each asset. They take the market value (what it’s worth now) and subtract the base cost (what you originally paid for it, plus any allowable expenses like transfer duties or legal fees). The difference is your capital gain.

4. You pay capital gains tax on the total gain. The gain gets added to your taxable income for the year, and you pay tax at your normal rate.

After the deemed disposal, your assets get a new “stepped-up” base cost. This means the base cost resets to whatever the market value was on the exit date. So if you actually sell those assets later as a non-resident, you only pay tax on gains that happened after you left (and in most cases, South Africa won’t tax those at all).

Which Assets Are Caught by SARS Exit Tax

The deemed disposal applies to most capital assets you hold anywhere in the world. The list is broader than most people expect.

Why SA Property Is Excluded

Your house in Cape Town or Joburg is not included in exit tax. Why? Because SARS can still tax you on it later. Even after you become a non-resident, if you sell South African property, SARS charges capital gains tax on the sale. So there’s no need for them to tax it on your way out.

Why Retirement Funds Are Excluded

Your retirement annuity (RA), pension fund, or preservation fund is also excluded. A recent amendment added paragraph (g) to Section 9H(4) to make this crystal clear. The reason is simple: SARS already taxes retirement funds when you eventually withdraw them, so taxing them on exit would mean paying tax on the same money twice. SARS keeps its right to tax your retirement money no matter where you live in the world, so they don’t need to charge you upfront.

For more on how to actually get your retirement money out when you’re abroad, see our guide to South African retirement fund withdrawal overseas.

The Foreign Property Trap (Double Taxation)

This is one of the nastiest outcomes of exit tax, and most people don’t see it coming.

Let’s say you own a flat in London worth R6 million. You bought it for R1 million. When you cease residency, SARS charges exit tax on the R5 million gain. But here’s the problem: the UK doesn’t recognise this deemed sale. As far as HMRC is concerned, nothing happened. When you eventually sell the flat for real, the UK taxes you on the full gain from R1 million to whatever you sell it for. You end up paying tax on the same gain in both countries, with no credit available from either side.

If you own property outside South Africa, get advice on this specific issue before you cease residency. The outcome depends on the specific Double Taxation Agreement between South Africa and the country where the property is located.

How to Calculate SARS Exit Tax

The maths is actually not that complicated once you understand the steps. Let’s walk through it.

Step 1: Work Out the Gain on Each Asset

Take the market value of the asset on the day before you cease residency. Subtract the base cost (what you paid for it, plus things like broker fees, transfer duties, and legal costs). The difference is your capital gain. If the asset is worth less than what you paid, that’s a capital loss.

Step 2: Add Up All Your Gains and Losses

Gains and losses across all your assets get netted together. So if you made R2 million on shares but lost R300,000 on crypto, your net gain is R1.7 million. Any capital losses you’re carrying forward from previous tax years can also be used to reduce the total.

Step 3: Subtract the Annual Exclusion

Every individual gets an annual exclusion that reduces their capital gain before tax is calculated. For the 2026/2027 tax year, this is R50,000 (it was R40,000 in previous years). This gets subtracted from your net gain.

Step 4: Apply the 40% Inclusion Rate

Here’s where people often get confused. You don’t pay tax on the full capital gain. Only 40% of the gain gets added to your taxable income. This is called the inclusion rate. So if your net gain after the annual exclusion is R1 million, only R400,000 gets added to your income.

Step 5: Pay Tax at Your Normal Rate

That included amount gets taxed at your marginal income tax rate. That’s the same rate you pay on your salary. The highest marginal rate in South Africa is 45%, which means the maximum effective CGT rate for an individual is 18% (40% inclusion x 45% tax rate). Most people pay less than this because they’re not in the top bracket.

SARS Exit Tax Worked Examples

Example 1: R3 Million Share Portfolio

Example 2: Mixed Portfolio With Some Losses

Example 3: Small Portfolio

These are simplified examples. Your actual bill depends on your full tax position, other income, rebates, and whether a Double Taxation Agreement applies.

What the 2026 Budget Changed for SARS Exit Tax

The Budget Speech on 25 February 2026 made two changes that directly affect exit tax planning.

The Spousal Donation Strategy Is Dead

Before the 2026 Budget, couples could reduce their combined exit tax bill with a simple trick. Spouse A ceases residency first. Spouse B (still a resident) donates big assets to Spouse A tax-free under the spousal donations exemption. Then Spouse B ceases residency with a much smaller asset base and pays less exit tax.

This no longer works. The spousal donations tax exemption now only applies when the person receiving the donation is still a South African tax resident. If your spouse has already ceased residency, donating assets to them can now trigger a 20% donations tax on top of any exit tax.

If your emigration plan was designed before 25 February 2026, it may already be outdated. This is especially important for couples who are halfway through a staggered emigration.

Slightly Higher Exclusions

The annual CGT exclusion went up from R40,000 to R50,000. The primary residence exclusion went up from R2 million to R3 million. These don’t make a huge difference for large portfolios, but they reduce the bill slightly for everyone.

When You Cease Residency Matters More Than You Think

The date you cease residency is the date SARS uses to value every asset. That one date determines the market value, which determines the capital gain, which determines your tax bill. So timing matters.

Market timing. If your share portfolio is at an all-time high when you cease, you pay more. If markets have pulled back, you pay less. You can’t predict markets, but if you have flexibility, avoid ceasing at a known peak.

Tax year timing. If you cease residency early in the tax year (shortly after 1 March), your total taxable income for that period is lower. That keeps you in a lower marginal tax bracket for the CGT calculation. Ceasing late in the tax year means a full year’s salary gets stacked with the exit tax, pushing you into higher brackets and a bigger bill.

Retirement fund timing. The cessation date also starts the 3-year clock for accessing your retirement annuity from abroad. The sooner you formalise, the sooner you can get to your RA money.

Your Final Tax Return and When Exit Tax Is Due

In the year you cease residency, your tax year gets split into two periods. The first period runs from 1 March to the day before cessation (you’re still a resident). The second period runs from the cessation date to 28 February (you’re a non-resident).

The exit tax must be included in your final resident return for the first period. This means filing a return with all your normal income plus the deemed capital gains.

Important: exit tax is due immediately when you cease residency. Not at the end of the tax year. Not when you get around to filing. Immediately. If you wait until your next annual return to pay, SARS can charge late payment penalties. And if you don’t declare it properly, SARS can impose understatement penalties of up to 200%.

This is why your SARS tax affairs need to be completely up to date before you cease residency. Outstanding returns or disputes will delay everything.

Can You Avoid SARS Exit Tax?

No. If you want to cease residency, exit tax is not optional. It applies no matter how you cease, whether through the ordinarily resident test or the physical presence test. There is no exemption. There is no way to defer it. There is no loophole.

What you can do is plan for it:

• Get asset valuations early so you know what the bill will look like before you trigger it
• Use capital losses to offset gains wherever possible
• Time your cessation to align with lower asset values and early in the tax year
• Document your base costs properly, especially for assets bought before 1 October 2001
• Know which assets are excluded so you don’t overestimate the bill

The other option is to not cease residency at all. You can stay a South African tax resident abroad and use the R1.25 million foreign employment income exemption instead. If your income is below the threshold and your exit tax would be big, staying resident might be the smarter move. Our guide to leaving South Africa covers this decision in detail.

Already Left Without Paying? There’s a Way to Fix It

If you left South Africa years ago without ceasing residency or paying exit tax, you’re not alone. A lot of people did this. The good news is you can fix it through the SARS Voluntary Disclosure Programme (VDP). This lets you come forward, tell SARS the truth, and settle your bill with reduced penalties. You’ll still pay interest on what you owe, but the understatement penalty is usually waived or reduced significantly.

The longer you wait, the more interest builds up. And with international data-sharing agreements like the Common Reporting Standard, SARS can now see what South Africans are doing financially in other countries. Coming forward yourself is almost always cheaper and less stressful than waiting for SARS to come to you.

If you left before the current cessation framework existed, the old financial emigration process may also be relevant to your situation.

Getting Help With SARS Exit Tax

Exit tax touches on capital gains tax, international tax treaties, exchange control rules, and retirement fund legislation all at once. That’s where mistakes happen. A wrong base cost, a missed exclusion, or bad timing on the cessation date can cost you tens or hundreds of thousands of rands.

• SARS for official guidance and the cessation process
• A SARS-registered tax practitioner who specialises in expat tax and capital gains
• A cross-border financial planner for asset structuring and retirement fund planning