Is there tax on foreign currency gains?

Daytime long exposure on Oxford Street near Oxford Circus on a busy weekend afternoon as shoppers walk past and several buses drive by.

Foreign exchange (Forex) transactions have become commonplace, whether for individuals traveling overseas or businesses engaged in international trade. If you have moved to Australia from overseas you will already be scratching your head on this.

The Australian tax implications of forex transactions are complex. And the ‘gain’ is not necessarily a capital gain.

Anyone with overseas assets, including overseas bank accounts or overseas credit cards, are at risk of generating forex gains or losses in any given tax year. Those most likely to generate forex gains are individuals moving to Australia.

Some situations where a forex gain or loss may arise:

  • Sale of an overseas property
  • Holding shares in an overseas investment portfolio
  • Holding cash in a bank account overseas
  • Having a credit card/loan with an overseas bank
  • Having a loan with an overseas bank (mortgage!)

If you are just holding cash in an overseas bank account with a balance of less than $250,000 then you may be exempt from forex gains arising in that account. However, this is only available where a relevant election is put in place.

Are you following the right steps to ensure you are aware of any forex gains you may have accrued? Are you aware of the reliefs that may be available on your forex gains?

Remember, the specifics of your foreign exchange transactions and the nature of your activities can influence the tax treatment of foreign exchange gains. Accurate record-keeping and professional guidance are key to navigating this complex tax landmine effectively.

The team at Salann are at have to navigate this with you.

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