My income from overseas is in another currency — which exchange rate do I use on my tax return?

The statement is in renminbi. The rent went into an account in Shanghai you have not touched all year. Somewhere in myTax there is a box that wants one Australian-dollar figure, and between the statement and the box sits a decision nobody ever explained: which exchange rate.

The rule underneath all of it

All foreign income, deductions and foreign tax paid must be translated into Australian dollars before they go in your return. 'Translated' is the tax word for converted — same thing.

Two features of that rule surprise people. The first is that it applies whether or not the money ever reaches Australia. Rent accumulating in a Chinese account is in exactly the same position as rent wired to a Westpac account. The second is that there is no single official rate: the rules generally require an amount to be converted at the exchange rate prevailing at the time of the transaction, or at an average rate, and the regulations let you choose between those two in many situations.

Since 1 January 2020, the rates the ATO publishes have come from the Reserve Bank of Australia. If your currency is not on the ATO's list, you may use any reasonable externally sourced rate.

The 'time of the transaction' is not the same moment for every kind of amount. The ATO's table of specific translation times sets ordinary income at the earlier of the time it is derived and the time it is received; deductions other than those for depreciating assets at the earlier of the time the expense is incurred and the time it is paid; and an amount for a capital asset at the time of the relevant transaction or event.

Four tables, and the one you probably want

For a return covering the year to 30 June 2026, the relevant page is the ATO's annual rates for the financial year ending 30 June 2026, published 13 July 2026. For the renminbi it gives 4.7442 as the average rate for the year ended 30 June 2026, and 4.6647 as the nearest actual rate at 30 June 2026. The Hong Kong dollar equivalents are 5.3006 and 5.3871. The rates are expressed as the foreign currency equivalent of one Australian dollar, so you divide by them rather than multiply.

The same page also carries calendar-year columns — for the renminbi, 4.6346 as the average for the year ended 31 December 2025 — and that is where the most common wrong turn happens. Take ¥120,000 of rent for the 2025–26 year. At 4.7442 it is about A$25,294. At 4.6346 it is about A$25,892. The two figures are roughly A$598 apart, and both rates are printed on the same ATO page. That subtraction is arithmetic on published rates rather than an ATO figure, but the point it makes is not: only one of those columns lines up with an Australian income year.

Two more tables exist for a reason. Monthly averages are published for each income year — the table for 1 July 2026 to 30 June 2027 went up on 14 August 2026 and so far holds only July, at 4.7189 for the renminbi, struck from 23 daily quotes. And daily rates come from the RBA directly, for the times when only a specific day will do.

When an average rate is allowed — and when it is not

The option to use an average is real but conditional. The averaging period you choose may not exceed 12 months, and you cannot use an average rate unless it is a reasonable approximation of the rates that would have applied had you used spot rates at the statutory translation times.

The ATO's published examples draw the line more clearly than the test does. Fortnightly rent from an overseas property, with agent's fees and small repairs paid through the year, is a reasonable case for an average rate on both the income and the deductions. The same taxpayer selling that property the following year is not — a one-off disposal of a large capital asset needs the rate at that event. Buying an office building for US$3 million gets the same answer for the same reason.

The working rule that falls out of it: many small amounts spread across the year can take an average, one large event takes the rate at the event.

Two limits are easy to trip over. You cannot use an end-of-year rate to translate foreign income that was not actually received in Australia in the same year it was derived — which rules out the 30 June column for most overseas rent and salary. And you cannot source an average rate from yourself or from an associate.

The two mistakes that cost the most

The first is converting a capital gain once. When an overseas property or parcel of shares is sold, the cost base is translated at the time of acquisition and the proceeds at the time of disposal — two different moments, two different rates. Working out the gain in renminbi and converting that single number at any one rate produces a figure that is not the Australian capital gain, and the gap widens the longer the asset was held. If you acquired the asset before becoming an Australian resident, you are generally treated as having acquired it when you became a resident, so that is the date whose rate matters — which is also why the value of the asset on that date is worth having on file.

The second is assuming your own bank statement is the wrong source. Where an Australian bank converts each payment as it arrives, you may simply use the Australian dollar amounts the bank actually credited. What you cannot do is run both methods and keep whichever result is lower.

Whichever route you take, keep the rate you used and the source of it with your records — the ATO asks for that specifically, and it is the part people reconstruct badly two years later. For straightforward cases the ATO's foreign income conversion calculator covers the 2013–14 to 2025–26 income years, though it is not built for foreign business income or for taxpayers on a substituted accounting period.

This is general information current as at August 2026 and not advice on your own return. Conversion stops being arithmetic fairly quickly — several currencies in one year, a sale in the middle of it, or foreign tax paid that you want to claim as an offset. Overseas income is part of the ordinary work in our individual tax return service, and if the year included a disposal, our property investor service covers the capital gains side of it.