Hello, I have a question regarding capital gains or losses when buying/selling a U.S. stock or ETF on a platform like IBKR. As we all know, realized profit/loss = Current Market Value - Purchase Price. The U.S. stock or ETF will be transacted in USD despite requiring the deposit of AUD (IBKR will automatically convert the AUD to USD when the transaction happens and the transaction history will be in USD). The problem, however, is that these values will be in USD so it needs to be converted to AUD before filing a tax return. When purchasing, l plan to use that current day’s exchange rate of USD per AUD by the RBA and the Purchase Price (in USD) from the transaction history to calculate the AUD value. When selling, I plan to use the Sold Price (in USD) and that current day’s exchange rate of USD per AUD by the RBA to calculate the AUD value After that, I can find the difference between the two values to find the profit or loss. I also plan to write all these down. Is this a possible way to do my tax regarding capital gains or losses? I find the statements in IBKR very overwhelming.
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Can you check with IBKR first? I'm fairly certain their annual statement does the CGT calculation on a FIFO basis for you and I believe you would be able to select AUD as your base currency.
Hi @CuriousWalrus12,
When you buy or sell foreign shares, you need to convert both the purchase and sale amounts from USD to AUD using the exchange rate on the respective transaction dates.
We accept the exchange rates published by the Reserve Bank of Australia (RBA), so using the RBA’s daily rate is appropriate.
To work out your capital gain or loss you’ll need to:
- convert the purchase price (in USD) to AUD using the RBA exchange rate on the purchase date, then
- convert the sale price (in USD) to AUD on the sale date
- subtract the AUD purchase amount from the AUD sale amount to determine your capital gain or loss.
It’s also a good idea to keep detailed records of:
- transaction dates
- USD amounts
- exchange rates used
- AUD equivalents
- any brokerage or fees (also converted to AUD on the date incurred).
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