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wiggy1213(Newbie)Newbie
4 Oct 2021

I was running a travel business that took Australian customers to the US twice a year. Two years ago, I had US$ 75,000 in an overseas account for business operation funds, but as the international border was blocked due to the Covid 19, I converted the unused foreign currency back to Australian dollars. In the meantime, I loss of $816 in convert rate. So does this $816 loss able to tax deductible? If so, where should you fill out in an individual tax return? And if, in other words, $816 was considered as a gain, how would it be taxed? The $250,000 balance election was mentioned through the ATO website. Does this clause affect my case when I gain $816 through foreign currency exchange?

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2,758 views
2 replies

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AriATO(Community Support)Community Support
7 Oct 2021

Hi @wiggy1213 What you have described is a common forex transaction where a loss can be made for forex accounts with a credit balance (that is, deposit or savings account). This means that due to fluctuations of the exchange rates you're withdrawing less money compared to the value at the time the funds were deposited. Under the forex measures you can claim a deduction for this loss. The same would apply if you made a gain where the value at the time of withdrawal ends up being more than when the funds were deposited. Forex gains are assessable and entered at item 24. Other income of your individual tax return. Forex losses are deductible and entered at item D15 - Other deductions. When it comes to the $250,000 account balance, you're not affected by this unless you elect to apply it. See our website about - Forex transactions - https://www.ato.gov.au/business/foreign-exchange-gains-and-losses/common-forex-transactions/ Tax return instructions for individual supplementary - https://www.ato.gov.au/Individuals/Tax-return/2021/Supplementary-tax-return/

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NateATO(Community Director)Community Director
7 Oct 2021

Sorry to hear about how COVID affected your business. We're going to have a look into this question for you and we'll be in touch soon :)

Most helpful reply

AriATO(Community Support)Community Support
7 Oct 2021

Hi @wiggy1213 What you have described is a common forex transaction where a loss can be made for forex accounts with a credit balance (that is, deposit or savings account). This means that due to fluctuations of the exchange rates you're withdrawing less money compared to the value at the time the funds were deposited. Under the forex measures you can claim a deduction for this loss. The same would apply if you made a gain where the value at the time of withdrawal ends up being more than when the funds were deposited. Forex gains are assessable and entered at item 24. Other income of your individual tax return. Forex losses are deductible and entered at item D15 - Other deductions. When it comes to the $250,000 account balance, you're not affected by this unless you elect to apply it. See our website about - Forex transactions - https://www.ato.gov.au/business/foreign-exchange-gains-and-losses/common-forex-transactions/ Tax return instructions for individual supplementary - https://www.ato.gov.au/Individuals/Tax-return/2021/Supplementary-tax-return/

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