Author: JayATO(Community Support)Community Support 9 Apr 2026
Hi @Bora_Kaya,
Foreign exchange losses on a business bank account are generally treated as operating losses and are deductible against your assessable income. If you carry on a business and include all your foreign exchange losses in calculating your business net income or loss at question 15 of your tax return, you can claim them there. Losses are brought to account when they're realised, such as when you dispose of foreign currency, or a right to it ceases.
The $250,000 balance election affects your ability to claim these losses. If you make this election for a qualifying forex account and the account balance remains within the A$250,000 equivalent limit, you won't realise any assessable forex gains or deductible forex losses on withdrawals from that account. This means losses are disregarded while the election is in effect and the balance test is met.
You can elect at any time for a particular account, and the treatment generally applies prospectively from the time of election. An election won't necessarily apply to an account for a whole income year. It depends on when the election takes effect and when it ceases to have effect. There's no restriction preventing you from making the election in a future financial year if you haven't made it previously. Once made, the election continues until either you breach the balance test, or you choose to revoke it. If the balance exceeds A$250,000, the exemption treatment ceases for the period of the breach, subject to a buffering rule that allows up to 2 breaches of 15 days each per income year.
The election must be made in writing and kept with your tax records. It doesn't need to be sent to us. It's worth noting that you can't selectively turn the election on and off each year to maximise gains and minimise losses. Once in effect, it applies to the specified accounts until the conditions change.
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