Eligibility to account in a functional currency
Only certain taxpayers can choose to work out their taxable income or tax loss using a non-Australian dollar applicable functional currency. This guide is relevant only if you are either of the following:
- a resident who must prepare financial reports under section 292 of the Corporations Act 2001
- a non-resident carrying on business through a permanent establishment in Australia.
Your applicable functional currency is the sole or predominant currency in which you keep your 'accounts' at the time you choose to use functional currency.
'Accounts' means ledgers, journals, statements of financial performance, profit and loss accounts, balance sheets and statements of financial position and includes statements, reports and notes attached to, or intended to be read, with such items
The following taxpayers using a non-A$ applicable functional currency are not covered in this guide:
- Australian residents carrying on business through overseas permanent establishments, using a non-A$ applicable functional currency to work out their taxable income or loss
- offshore banking units, using a non-A$ applicable functional currency to work out total assessable OB income and total allowable OB deductions
- attributable taxpayers in respect of controlled foreign companies (CFC) and transferor trusts, using a non-A$ applicable functional currency to work out the 'attributable income' of the CFC or transferor trust.