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  • Reporting during the year

    Business activity statements

    When completing a business activity statement (BAS):

    1. calculate your instalment income in the applicable functional currency
    2. translate your instalment income into Australian dollars at the appropriate rate
    3. complete label T1 of the BAS accordingly.

    Company tax return

    The functional currency rules allow some taxpayers to choose to work out their taxable income or tax loss by using a non-A$ currency as their applicable functional currency (FC).

    All amounts disclosed on the company tax return must be disclosed in A$.

    When a label amount is accounted for in a non-A$ FC, that sum should be translated into A$ using the same functional currency translation rate (shown at label 8N of the company tax return) used to translate the taxable income or tax loss figure.

    The following amounts are always accounted for in A$, and not in the FC:

    Label 7 J Franking credits

    label 7 C Australian franking credits from a New Zealand company

    The following amounts do not need to be translated into A$ before completion of the return:

    Label 7 R Tax losses deducted

    label 7 S Tax losses transferred in

    Tax losses are allowable deductions from taxable income. If you carry forward losses, you should account for and claim them in your FC. Report any losses used during the income year at label 7R by translating the value of the loss used into A$ at the FC translation rate.

    Label 8 N Functional currency translation rate

    As mentioned above, label 8N is where you show the exchange rate used to translate the FC taxable income figure (and many other figures on the company tax return) into A$.

    At label 8N, show the translation rate the company used to translate the taxable income figure from the FC into A$. The translation rate is the amount the FC amount is divided by to get an equivalent amount of A$ – that is, the number of non-A$ currency units that equal one A$ rounded to four significant figures – see Examples.

      Last modified: 16 Apr 2020QC 17626