Introduction

This page is designed to answer some of the commonly asked questions on foreign investments, specifically foreign exchange listed securities and foreign bank accounts

FAQs

Question: Where does Class source its foreign listed securities data and foreign exchange rates from?

Answer: Class sources the data for Australian and international markets from a range of leading providers of market and financial data. All are widely used by many of the largest financial service institutions.

Question: Where do the foreign exchange rates come from?

Answer: The source of our exchange rate information depends on its type:

• Spot exchange rate information is compiled from multiple sources in order to obtain the most accurate rates. The two primary sources are Morningstar and Six Financial Information. These data providers collate data from many of the largest forex trading desks run by banks and brokers.
• Official exchange rates directly from the central bank or other government organisations from each country e.g. from the Reserve Bank of Australia (RBA).

Class currently uses the official end-of-day exchange rates from the Reserve Bank of Australia where it is available and other official or spot rates where an RBA rate is not available. 

Question: Can I overwrite the exchange rates in Class?

Answer: Yes, you can change the exchange rates simply by overwriting the Australian Dollar equivalent, this will recalculate the foreign exchange rate applied to derive the Australian Dollar equivalent.  You can also use the Class's Fit to Cash functionality to automatically adjust the exchange rate used in the business event to match the relevant cash transaction. 

Question: Which foreign currencies does Class support?

Answer: Please refer to and Foreign Currencies Supported for a full list of supported currencies.

Question: Which foreign stock exchanges does Class support?

Answer: Please refer to Foreign Markets Supported for a full list of supported stock exchanges. Class will continue to add to this list based on client demand:

Question: What are the withholding rates for foreign Dividend and Interest Income?

Answer: Foreign tax credits are automatically calculated and will be deducted from foreign income based on the Country and Income Type shown in the table below:

Question: How does Class revalue foreign listed securities?

Answer: For foreign securities quoted on a recognised stock exchange, the valuation is recorded as the last quoted sale price as at the close of business on reporting date, converted to Australian Dollars using the exchange rate at the close of business on reporting date. Where RBA exchange rates are available, Class will use them in preference to another official or spot exchange rate. 

Question: How does Class account for foreign exchange gains or losses for accounting purposes?

Answer: All foreign currency transactions during the financial year are brought to account using the exchange rate in effect at the date of the transaction. Foreign currency monetary items at reporting date are translated at the exchange rate existing at reporting date. Exchange differences are recognised in the operating statement in the period in which they arise. For accounting purposes, the exchange gains or losses are booked under FIFO method only.

Question: How does Class account for foreign exchange gains or losses for tax purposes?

Answer: For foreign listed shares and managed funds, Class will support the 12 month rule (also known as the short-term rule) This generally provides that the foreign exchange measures do not apply to foreign exchange realisation gains and losses on the acquisition or disposal of capital assets where the time between that acquisition or disposal, and the due time for payment, is not more than 12 months. Such gains and losses are effectively folded into the CGT treatment of the asset's. The tax effect on foreign securities will use existing CGT treatment for both realised and unrealised gains/losses.

For foreign bank accounts, the general principle is that foreign currency gains or losses have a revenue character rather than a capital nature. Foreign currency gains or losses are assessable or deductible when they are realised. They are realised when a foreign exchange realisation event happens. The calculation of forex gains or losses will be based on the methods users selected, i.e. FIFO or Retranslation. Tax effect on realised forex gains or losses and unrealised forex gains or losses will be booked automatically unless the fund has chosen $250K exemption.

Refer to our knowledge article for more information on How does Class calculate foreign exchange realised gain?

Question: What methods are used for determining the cost base of the Foreign Bank Account in Class?

Answer: Class supports both FIFO and Retranslation but does not currently support the Weighted Averaging Method. Class also supports the $250K balance exemption which can be selected to disregard any forex gains or losses. 

Question: Should I transition from my current manual method of accounting for foreign listed securities manually to the new automated functionality? 

Answer: Yes, absolutely. It means price (hence valuation), dividend (foreign income) and asset allocation will be updated automatically in Class. You no longer need to search on Google/Yahoo finance for closing prices or manually calculate Forex conversion on dividend income. You need to refer to  Converting Existing Foreign Securities to New Foreign Securities in the January 2015 Release for details on how to transition your existing foreign securities.

Question: Should I take advantage of the new foreign bank account functionality? If so, how do I transition into the new world?

Answer: Yes, absolutely. It means that for every transaction that appears in the bank account in its source currency, there will be a corresponding exchange rate for the day. This means no more manual exchange rate conversion is required. You need to refer to Converting an Existing Foreign Bank Account to the New Foreign Bank Account available from 4.9.1 Release for details on transitioning your existing bank account to the new functionality.

Question: Are there any corporate actions supported for foreign listed securities? 

Answer: Simple corporate actions such as Capital Return, and Split or Consolidation will be automatically supported. More complex corporate actions can be processed manually.  

Question: Are there any new reports for foreign assets?

Answer: Our existing reports have been updated to support foreign assets. We have also added 3 new reports specifically designed to reconcile between the foreign currency and Australian Dollars:

• Foreign Asset Worksheet
• Foreign Bank Account Movement Report
• Foreign Income Worksheet.

Question: We have a number of clients who have invested in listed shares on the Shanghai Stock Exchange (SSE) on Swiss Stock Exchange, but it is not currently supported in Class. What should I do?

Answer: Please complete our Feature Request and we can turn on the unsupported stock exchange feed. It will then allow you to create the security, pull down all the historical prices, income announcement and corporate action data.

Question: We have a few clients who have bank accounts in New Taiwan Dollars (TWD), but it is not currently supported in Class. What should I do?

Answer: Please complete our  Feature Request we can turn on unsupported foreign currency into functional currency for bank accounts.

Question: When are prices from Foreign exchanges loaded onto Class?

Answer: Refer to Daily Pricing for Foreign Listed Securities