Hi, if you made a capital gain by selling an Australian stock then you use that money to buy US dollars, if the Australian dollar then strengthens against the US dollar then you converted the US dollars back into Australian dollars resulting in a loss can that loss be used to offset the capital gain from before?
Hi @Dperson,
Yes, you can use a forex loss to offset the capital gain. The loss from converting US dollars back to Australian dollars is treated as a forex realisation loss under Division 775 of the tax law.
When you sold your Australian stock and made a capital gain, then used that money to buy US dollars, you acquired foreign currency. When the Australian dollar strengthened and you converted the US dollars back to Australian dollars at a loss, this created a forex realisation event. Specifically, this is forex realisation event 1 (disposal of foreign currency).
The forex loss is an allowable deduction. This means it lowers your taxable income for the year. You don't use the loss to directly offset capital gains.
You can find detailed information about foreign exchange gains and losses, including how forex realisation events work and how to calculate your gain or loss.
21 May 2026 · 4 min read time
15 Apr 2026 · 8 min read time
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