Glossary page
Terms and key phrases:
AIT
Approval for international Transfer
a formal process administered by SARS to ensure that taxpayers are tax-compliant before transferring funds offshore. It replaced the older Foreign Investment Allowance (FIA) and Emigration processes.
Approval for International Transfer (AIT) Pin:
Required for transferring funds abroad post-tax residency.
Tax Residency:
Ordinarily Resident Test:
Assesses if South Africa is your “real home” based on various factors.
Physical Presence Test:
Evaluates the number of days spent in South Africa over specific periods.
Exit Tax:
Capital gains tax on worldwide assets when ceasing tax residency.
RAV01 Form:
SARS form to declare cessation of tax residency.
Deemed Disposal:
Assumed sale of worldwide assets for tax purposes upon ceasing residency.
(TCC)
SARS Tax clearance certificates
A tax clearance certificate (TCC) is issued by SARS to validate the tax status of a taxpayer, specifically with regard to compliance.
Tax Directive
Instruction from SARS regarding tax treatment of specific income.
Financial Emigration:
Formal process of ceasing tax residency with SARS.
Double Tax Agreement (DTA):
Treaty to avoid double taxation between countries.
SARS:
South African Revenue Service, the tax authority.
Tax Compliance Status (TCS)
SARS assessment of an individual’s tax standing.
Non-Resident Letter:
Document confirming non-resident tax status.
Two-Pot Retirement System:
Retirement fund structure affecting tax treatment.
Double Tax Agreement
are treaties between South Africa and other countries to prevent taxpayers from being taxed twice on the same income.
Exit Tax
exit tax refers to the capital gains tax (CGT) that is triggered when a person or company ceases to be a South African tax resident. This is often called a “deemed disposal” for tax purposes.
Capital Gains Tax (CGT)
Capital Gains Tax (CGT) in South Africa is a tax on the profit (capital gain) made from the disposal of certain assets. It is part of the Income Tax system and is administered by the South African Revenue Service (SARS).
Financial Immigration
Financial emigration was a formal process that South African citizens or residents used to change their tax and exchange control status from resident to non-resident with the South African Reserve Bank (SARB) and SARS (South African Revenue Service). It allowed them to declare themselves permanently abroad for tax and currency purposes
Tax Emigration
Refers specifically to changing your tax residency status with the South African Revenue Service (SARS). This in turn triggers the Exit Tax and is the current and main way to formally “emigrate” for tax purposes.
SARS non-resident letter
It formally acknowledges that SARS accepts you are no longer a tax resident of South Africa.
Repatriation Tax Services
specialized tax advisory and compliance services that help South African individuals who are emigrating or have ceased tax residency to legally transfer funds offshore, Navigate SARS and Reserve Bank requirements, Manage and minimize exit tax and ensure full tax compliance during and after tax emigration
South African Expatriates
South African expatriates are individuals who were born in South Africa or hold South African citizenship but are living and working outside of South Africa for an extended period, often in another country for employment, study, retirement, or other personal reasons.
TCS Pin
Tax Compliance Status PIN (TCS PIN)
A TCS PIN is a unique electronic reference number issued by SARS that allows third parties (such as institutions, employers, or foreign tax authorities) to verify a taxpayer’s Tax Compliance Status in real-time via the SARS eFiling system.
world wide income taxation
Worldwide income taxation is a taxation principle whereby a country taxes its tax residents on their global income, regardless of the source or location of that income. This system is commonly applied by jurisdictions such as South Africa (via SARS), the United States, and several OECD member states.
ITR12
An ITR12 is an annual income tax return for an individual.
ITR12T
An annual income tax return for a trust.
Declaration of Cease Tax Residency
A Declaration of Cease Tax Residency is a formal notification submitted to the South African Revenue Service (SARS) indicating that an individual or entity no longer meets the criteria to be treated as a South African tax resident, as defined under the Income Tax Act No. 58 of 1962.
Tax payer
A taxpayer is a natural person (individual) or a legal entity (such as a company, trust, or partnership) that is liable to pay tax under the laws of a specific jurisdiction. In tax terminology, a taxpayer is any person or entity subject to taxation as defined in relevant tax legislation.
Ordinary residence test
The Ordinary Residence Test is one of the primary criteria used by the South African Revenue Service (SARS) to determine whether an individual qualifies as a tax resident of South Africa.
Physical presence test
The Physical Presence Test is a quantitative criterion used by the South African Revenue Service (SARS) to determine if an individual qualifies as a tax resident of South Africa based on the number of days physically present in the country.
Expatriate
An expatriate (or expat) is an individual who resides temporarily or permanently outside their country of tax residence or citizenship, often due to employment, business, or personal reasons.
Retirement withdrawals
Retirement withdrawals refer to the lump sum or annuity amounts that an individual accesses from a retirement fund upon retirement, resignation, retrenchment, or emigration. These withdrawals are subject to specific tax treatment under South African tax law, as administered by SARS.