Hi,
I can't find any info on this and I think I'm just being a bit optimistic BUT
Lets say the exchange rate at the time of a payment from $1USD is $1.50 AUD. The bank only gives you in the transfer the equivalent of $1.45
Can I claim that 5c per dollar as a deduction for a payment on an invoice for my small business?
Essentially I missed out on about $600AUD earlier this year and wanted to know if it was something I could sneak in.
Good luck
Can I claim that 5c per dollar as a deduction for a payment on an invoice for my small business?
What 5c? You didn't get this or pay anything, so how can you claim it?
But lets say you did claim it, it would then mean you would have to declare the income as $1.50, with a 5c exchange fee and then you banked $1.45…… You can't claim the 5c against the $1.45……
See where this is going?
tl;dr no
That sounds ridiculous
I literally lost money.
You didn't lose it because you never had it.
I literally lost money.
What MONEY!?
$1 USD exchanged to AUD is $1.45…… Simple.
You lost nothing.
No.
This has to be a troll post.
I would normally agree, but I fear not in this case……
I am deeply concerned that there are proprietors in Australia with this level of intellect that could be responsible for :
I pray that the latter 2 won't ever happen.
I’m a sole trader, courier with 6 kids.
Not shore what your point is
@tsunamisurfer the situation seems to be more dire than expected, you're gunna need a whole congregation of priests to pray us out of this one
You are not going to get good advice about the tax treatment of currency and foreign currency on Ozbargain as most people have little understanding of how business taxes work and foreign currency is especially more difficult as certain exceptions apply to and it is complicated to calculate. So best talking to an accountant to understand how best to deal with the tax treatment of foreign currency.
A simple way of understanding basics of how tax treatment foreign currency works for business purposes (though you will likely need professional advice to fully understand how to properly declare whether it is income/expense) is it is either going to be taxable business income or tax deductible business expense ie either you make income or expense from difference between the cost price and selling price of buying and seller various amounts of foreign currencies where the bank transfer rate and other fees will relate to costs of buying and selling currency and impact on whether you earn income or incur an expense.
this question is confusing as all f
Pertinent response
Yes it is
Hi! Yes you can book the FX loss but it's not some magical deduction you think it is.
If you make a sale at USD$1000 and the FX rate on the day was makes the AUD equivalent $1500, that gets recorded in your books as sales of AUD$1500. When the bank only gives you $1450, you book a Realised FX Loss expense of $50, which means you'll only be taxed on $1450 and not the $1500 that you originally recorded in your books.
Basically, what the bank gives you is how much you're taxed on.
If you have a small business though, you may be eligible for asset instant tax write-offs and payroll tax concessions, so check with your accountant.
Bank or Casino, the House always wins.
Yes obviously you can!
But in that case your income will be @ 1.50, then, what's the point?
You report the amount you get from the bank as sales revenue. The bank books the $600 as their profit they need to pay tax on.
Say if you think your invoice is $1000. After exchange gives you $900 and you want to claim the $100 as deduction to come out as $800 rather the the $900 deposited into your bank. There is a magical $100 gap.