Mr Taxman
Change the way you feel about taxes.
Get informed and discover what the taxman doesn't want you to know.
Sharing it with Australia, Mr Taxman is a regular Woman’s Day columist and TV finance commentator
  • click to visit Mr Taxman on Twitter
  • click to visit Mr Taxman on FaceBook
  • rss

General translation rule for foreign currency trading

Dec 12, 2011

What is the general translation rule for foreign currency trading?

Under the general translation rule, all tax-relevant amounts must be translated into Australian currency as the Australian Taxation Office (ATO) uses this as a common unit of measurement.

Quite obviously this will be quite easy to calculate if you simply use some Australian dollars to buy say US dollars and then after a certain period of time you convert the whole amount back to Australian dollars.

However the calculations can get quite messy when they are partial conversions (where you would generally use the first-in, first-out method) or where there is multi-currency transactions occurring such as buying US dollars and then converting to Euro and back to US dollars.  In the latter situation, you need to determine the actual translation into Australian dollars on the day that the transaction occurs.  Note that the general translation rule applies regardless of whether or not the foreign amounts are actually remitted back to Australia.

If you have numerous transactions during the year and it is not feasible to calculate the daily rate for each transaction then the ATO will allow you to translate the amounts into Australian currency using an exchange rate that is an average of the rates applicable during the relevant period that the transactions occurred.

The ATO publish daily, as well as average monthly and yearly exchange rates for approximately 30 countries on their website www.ato.gov.au.  If you cannot find a rate, the ATO will allow an appropriate exchange rate provided by a banking institution or another reliable external source.

 

This article first appeared in the Nov/Dec 2011 issue of YTE Magazine www.YTEmagazine.com. Copyright Your Media Edge Pty Ltd 2011.



 

Tags: Accountant SydneyDeductionsPersonal taxSharesTravel

Author: Mr Taxman

Comments

Post a New Comment

Media Availability

Are you interested in booking Mr Taxman for a speaking engagement or requesting his viewpoints for an article?

comments-rhsLatest Comments

  • " Hello, My name is Faith am from USA ..... and I am very happy for posting on this blog on how a great spell caster helped me bring back the love of my life. I know there are lots of women like me..."

    By: faith at Jun 27, 2019 10:31AM

    Post: 101 Ways to Save Money on Your Tax Legally

  • "Hey,I'm so excited my broken Marriage has been restored & my husband is back after he left me and our 2 kids for another woman. After 8 years of marriage, me and my husband has been into one quarrel..."

    By: Yanira Evie at Jun 27, 2019 5:15AM

    Post: Marriage

  • "Save Your Relationship and Get Your husband I don`t know how to really thank Dr Akpala. Live Long for what he did for me. My Name is Faith Komawat i am from Poland, i get Marride to Mr Scott this..."

    By: Faith at Jun 27, 2019 4:53AM

    Post: Marriage

  • "My name is Nabrel Kim. from FL in USA. Am here to testify of a great and powerful spell caster named Dr. Uzoya I was so confused and devastated when my lover left me for another girl. I needed him..."

    By: nabrel at Jun 27, 2019 2:35AM

    Post: Marriage

  • "My name is Sandra James and I base in USA...“My life is back!!! After 14 years of Broken marriage, my husband left me and our two twins. I felt like my life was about to end i almost committed..."

    By: Sandra James at Jun 27, 2019 2:15AM

    Post: Employer obligations checklist