Hi there,
I am seeking expert guidance on the tax treatment of a foreign exchange loss.
This is in regard to holding USD currency in an overseas bank account. As the AUD strengthened, a loss was incurred when converting the unspent funds back to AUD. Could you please clarify if this is loss deductible?
I would appreciate advice from specialists or community members with experience in foreign exchange to help clarify tax obligations.
Thank you!
Hi,
Generally, foreign exchange gains or losses can be assessable or deductible depending on the purpose for holding the foreign currency. If the USD funds were held for business or income-producing purposes, the exchange loss may be deductible under foreign exchange (forex) tax rules.
However, if the money was held for personal use or private savings, the loss is usually not deductible. Tax treatment can also depend on whether the transaction falls under specific forex realisation events and how long the funds were held.
It’s best to review ATO guidance or consult a registered tax adviser, as the details of the account usage and transaction history can affect the outcome.
Hope this helps!
And here's an ATO reference that adds to the guidance from @rainaroy26 , @Phong .
Foreign exchange gains and losses | Australian Taxation Office
Thank you for the replies! I will take this advice into consideration.
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