On 8 April 2025, the South African Revenue Service (SARS) announced a set of updates on tax directive system changes which will impact South Africans who have already left the country or are in the process of cutting tax ties. This will come into full force on 11 April 2025.
John-Paul Fraser
Team Lead: Cross Border Taxation
Shuanita de Wet
Retirement and Pension Fund Specialist
Importance of Cessation of South African Residence
The first relates to Emigration Withdrawal which was replaced by the Cessation of South African Residence application for the withdrawal of retirement interest. This change came into effect on 1 March 2022, which was followed by a transitional period up until 1 September 2024. During this period provisions in the rules of various retirement fund types allowed members to access their full interest in their preservation funds or retirement annuity funds on termination of membership as a result of emigration.
These provisions were deleted with effect from 1 September 2024. SARS announced the system will no longer accept any tax directive applications submitted on or after this date for the reason “Emigration Withdrawal” as it was replaced by the system of Cessation of South African Residence.
For South Africans abroad who haven’t aligned themselves with the updated “cessation” process risk delays, rejections, or unnecessary tax complications. This emphasises the importance of ensuring your tax residency status is correctly reflected as that of non-resident at SARS. Do not assume your status is correct.
With increased scrutiny and digital enhancements on SARS’ end, you need to make sure you’re one step ahead. As a practice, we strongly recommend starting with a SARS diagnostic review before taking any further action. The diagnostic review plays a pivotal role in ensuring adherence to expatriate tax laws and exemptions, thus reducing the likelihood of triggering unforeseen tax liabilities.
Expats must use eFiling when applying for tax relief
Going forward expats can no longer use the manual channel for submitting the RST01 Directive Application for Relief of South African tax for pension and annuities relating to gratuities and savings component withdrawals. This submission will be replaced by eFiling and must be submitted with supporting documents for processing.
On face value, with the implementation date being anticipated, it seems that this change is an effort to make it easier for non-resident taxpayers to benefit from a refund where a Double Tax Agreement (DTA) is in place.
However, the submission must meet the SARS requirements. Non-resident taxpayers, be that a foreigner who worked in South Africa for a period of time or a South African who have emigrated and still have an annuity or pension money in South Africa, should rope in the professional guidance of experts in international tax law with these submissions.
SA tax refunds for pension and annuities may take longer
From 11 April 2025 SARS will also discontinue the RST02 request by a non-resident for a refund of tax for pension and annuities in terms of a DTA. It is anticipated that this will form part of a tax return moving forward.
SARS announced: “On submission of a tax return during assessment a possible refund might become payable.”
This may make it more complex to get your tax refund and therefore it is critical to submit an accurate tax return. Once again, expert tax advice will help as in practice we found SARS does not just pay out when receiving a request for a refund. In many instances the tax man will request additional documents to adjudicate the refund.
Conclusion
While we await further clarification from SARS on the supporting evidence it will require, it is clear — the stakes just got higher for non-residents with a preservation fund or retirement annuity fund. Given the ever-evolving nature of tax laws and the increased scrutiny by SARS, experts at the forefront of international tax laws are best placed to navigate this updated process and avoid compliance pitfalls.
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