Financial emigration: The best route from South Africa to United States

Let the immigration experts guide your immigration journey. Image: Pexels.

Financial emigration: The best route from South Africa to United States

(Partner Content) Financial emigration is an important consideration to bear in mind when planning your move to the United States.

Financial emigration: The best route from South Africa to United States

Let the immigration experts guide your immigration journey. Image: Pexels.

If you are looking into immigrating to the United States, you may have started thinking about the costs involved including the tax implications. It is not only about physically leaving South Africa but also making sure that you emigrate financially so that the South African Revenue Service (SARS) do not regard you as a resident for tax purposes.

What is financial emigration?

Financial emigration is the procedure in terms of which a South African taxpayer is formally considered as a non-resident as interpreted by SARS.

This means that once you have financially emigrated from South Africa, SARS will not be able to tax you on your foreign assets and foreign income. You will only be taxed by the country you have immigrated to, in this case, the US.

Previously, the procedure to emigrate financially from South Africa was a complicated tax and exchange control process. However, there is now some good news for prospective emigrants: According to amended tax legislation that came into effect on 1 March 2021, financially emigration has now become much simpler than it was before.

The changed legislation has removed the onerous exchange control process that previously complicated the financial emigration procedure with financial institutions.

How to emigrate financially?

Make sure you follow the correct process to be considered a non-resident for tax purposes. Image: Pixabay.

According to SARS, a person is considered as a tax resident of South Africa if he or she is ordinarily resident in South Africa or meets the requirements of the physical presence test. If neither of these tests apply, the person will be viewed as a non-resident.

If you are planning to emigrate financially, make sure you follow the steps listed below:

  • Your personal tax record must be 100% up to date and in compliance with SARS’ requirements. In this regard, SARS will also examine the tax record of any company and/or trust you may be connected to.  
  • You will then need to pass the Physical Presence Test which is time-based. This test will determine whether you were ordinarily resident in South Africa during the tax year. So, if you were physically present in South Africa for a period or periods exceeding 91 days during the tax year under consideration; and 91 days in total during each of the five tax years preceding the tax year under consideration; and 915 days in aggregate during the above five preceding tax years, then you will be regarded a resident for the purposes of SARS’ Physical Presence test.
  • The second test SARS will look at is the Ordinary Resident Test. In terms of this test, you will be regarded as a resident if your permanent home, to which you normally return, is in South Africa.
  • If you pass the above tests to be regarded as a non-resident, then you can submit your application to SARS for an Emigration Tax Clearance Certificate. You will also need to include an “exit tax amount” and a declaration of all your South African assets and liabilities.
  • SARS will then audit your application and once approved by SARS, you will be regarded as a non-resident by SARS.

Get all the guidance you need from the immigration experts

Financial emigration can be a very complex matter. We, at the Law Offices of Grant Kaplan, have been working with immigration matters for almost 30 years. We understand the intricacies involved and are in the best position to guide you through the process.

Contact us today for a full immigration service for all visa categories.
Tel: +1 561 347 8440