Hi ATO Community,
I am an Australian sole trader. I held some USD(Under $250,000) in an overseas bank account as business operating funds. Due to the AUD strengthening against the USD, I incurred a forex loss when converting back to AUD.
My questions:
- As the funds were held for income-producing/business purposes, can I claim the forex loss as a deduction under Division 775 in my business income or losses?
- How do I apply the FIFO rule to calculate the loss if funds were deposited at different times and exchange rates?
- What records and documentation does the ATO require to substantiate the business purpose of these funds?
- Should I consider the $250,000 balance election, and what are the long-term implications?
Thank you.
Sincerely,
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