For calculating foreign exchange rates, Class uses the Reserve Bank of Australia (RBA) rates. This page explains why we use the RBA rates.
ATO Exchanges Rates
We initially approached the ATO about sourcing our Foreign Exchange Rates from the same source as the ATO. Unfortunately, due to confidentiality reasons, they were unable to supply Class with these details.
If we just go to the ATO's website, manually download the rates and upload them into Class, we will encounter the following limitations:
- ATO daily rates are not updated daily, they are usually updated on a monthly basis. For example if you want to obtain the exchange rate for yesterday, you cannot locate it. The most recent daily rate is for the end of last month.
- End of financial/calendar year rates are not readily available until many days or weeks after the end of the financial/calendar year.
- Many SMSF accountants/administrators process on a daily basis, including running period updates for valuation purposes on any given dates including yesterday, it is an absolute necessity that we have up-to-date valuation prices / exchange rates.
- The file format on the ATO website is not in an easily consumable format such as CSV, XML format.
- Manual method is prone to human errors and data incompleteness.
Does the ATO accept RBA foreign exchange rates?
We have researched this quite extensively, apart from the exchange rates published by the ATO, it also accepts the exchange rates provided by a number of reputable financial institutions (e.g. commercial banks) and the RBA. The following is a list of legislative reference where the ATO accepts the RBA foreign exchange rates:
- GSTR2001/2 GST Ruling for example explains how to convert amounts of consideration that are expressed in foreign currency into Australian currency for GST purposes, it specifically allows RBA rates for conversion.
- The ATO website for Foreign income conversion calculator for example, is designed to accept the exchange rates provided by a number of sources including banking institutions operating in Australia, the Reserve Bank of Australia or other sources of published exchange rates.
For the above considerations, we have engaged a data provider which sources its foreign currency directly from the central bank or other government organisations from each country. In Australia's case, from the RBA. It is updated on a daily basis. You can get daily exchange rates from the RBA website.
For example, the USD exchange rate on 16/02/2015 was:
0.7791 USD = 1 AUD
In Class it manifests as:
1 USD = (1/0.7791) = 1.283532 AUD