Conversion to Australian dollars

Last updated 16 March 2007

Type of foreign income	Convert to Australian dollars at:
Foreign pensions, annuities and deductions	the average exchange rate for the year or the rate that applied at the time you received each payment. If it was not remitted, use the exchange rate that applied on 30 June 2002. Convert any tax paid at the same rate used to convert the income.
Other non-salary or wage foreign income such as the dividends, interest or capital gains	the exchange rate that applied at the time the income was remitted to Australia. If it was not remitted, use the exchange rate that applied on 30 June 2002. Convert any tax paid at the same rate used to convert income.
Foreign capital gains	the time of the transaction or event for each transaction or event involving an amount of foreign currency (or the market value of property expressed in a foreign currency). For example, if an amount included in the cost base of an asset is expressed in foreign currency, convert that amount into Australian currency on the date that the expenditure was incurred. Convert capital proceeds on the date of the CGT event.
Foreign business income	the average exchange rate applicable to the trading period during which the income is earned. Convert tax paid at the rate applicable on the day it was paid.
Employment income	The average exchange rate applicable to the period during which the income is earned. Convert tax paid at the rate applicable on the day it was paid.

Refer to Taxation Ruling IT 2498-Income tax: foreign tax credit system: currency translation of foreign income: trading stock and depreciable plant: basis of returning foreign income: capital gains/losses for more information on the conversion to Australian dollars.

Below are details of Albert's income, expenses and the foreign tax he paid. All of Albert's foreign income amounts have been converted to Australian dollars.

Gross income
Australian employment income	$22,000
United States employment income	$6,000
United Kingdom pension	$4,000
Rental income from property in the United Kingdom	$1,000
United Kingdom dividend income	$600
United Kingdom interest income	$400
Total gross income	$34,000

Expenses
Medical expenses	$2,500
Expenses incurred in deriving Australian employment income	$2,000
Expenses incurred in deriving United States employment income	$450
Expenses incurred in deriving rental income	$250
Gift to an eligible charitable organisation	$200
Expenses incurred in deriving dividend income	$70
Expenses incurred in deriving interest income	$30
Total expenses	$5,500

Foreign tax paid
United States employment income	$1,800
United Kingdom dividend income	$60
United Kingdom interest income	$40
United Kingdom rental income	$300
Total foreign tax paid	$2,200

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