Foreign Exchange Gains

<p >The forex measures set out rules for expressing the Australian currency values of amounts that are denominated in foreign currency, and explain how to calculate gains and losses that are attributable to currency exchange rate fluctuations. The measures treat many of those gains and losses as assessable income or allowable deductions.

Under the forex measures:</p>

<ul >

<li >assessable gains are referred to as 'forex realisation gains'</li>

<li >deductible losses are referred to as 'forex realisation losses'</li>

<li >forex realisation gains and losses only arise when 'forex realisation events' happen.</li>

</ul>

<p >The forex measures apply generally to the realisation of assets, rights, and parts of rights acquired, and obligations and parts of obligations assumed, on or after the 'applicable commencement date'. Bank accounts are rights or obligations. For example, if you have a savings account, you have a right (a 'chose in action') that relates to the money deposited in the account. If you have a loan account, you have an obligation to repay.

The forex measures apply to all taxpayers except for, broadly speaking, taxpayers that are banks or similar financial institutions. However, if you hold a forex account with a bank (such as a savings or loan account in foreign currency) you will usually have to consider the application of these laws in calculating your assessable income and allowable deductions.</p>