Foreign-currency invoices: keep the AUD GST conversion trail

First establish whether Australian GST applies to the transaction. A foreign-currency invoice isn't automatically an export, a GST-free sale or a creditable purchase. It is simply an invoice denominated in another currency.

Record the tax decision before converting

Identify the supplier and recipient, nature of the transaction and why GST applies. Check whether the invoice shows GST in Australian dollars or supplies enough information to determine it. The ATO foreign-exchange ruling, GSTR 2001/2, explains conversion and the additional invoice requirements.

For purchases, don't calculate an Australian credit from a foreign tax line or from one-eleventh of an invoice with no Australian GST. A currency conversion changes the unit of measurement; it doesn't create an entitlement.

Choose the date and source consistently

GSTR 2001/2 describes accepted rate sources and conversion-day options. These include Reserve Bank of Australia rates, relevant commercial exchange sources and qualifying agreed rates. The available dates depend on the accounting basis and circumstances; cash and non-cash attribution should not be treated as identical.

Record the policy the business uses and the reason it applies to the transaction. A bookkeeping system's default exchange rate can be convenient, but you still need to know its source and date. Changing rates after seeing which produces less GST isn't a consistent method.

Check which way the rate is quoted

"0.65" is incomplete. Write "US$0.65 for A$1" or "A$1.5384615 for US$1". Those are reciprocal descriptions of the same illustrative rate. Confusing them can make an otherwise tidy report materially wrong.

This fictional non-cash-basis seller makes an ordinary wholly taxable supply in Australia. The invoice is issued before any payment, the approved GST conversion method uses the invoice date and the parties' documents support the example rate. It is not an assumed export sale.

Record	Foreign currency	Rate and calculation	Australian dollars
Invoice net value	US$650	US$0.65 per A$1; 650 ÷ 0.65	$1,000
Invoice GST	US$65	65 ÷ 0.65	$100
Gross receivable	US$715	715 ÷ 0.65	$1,100
Later payment received	US$715	Settlement rate US$0.66 per A$1; 715 ÷ 0.66	$1,083.33 before fees
Settlement difference	Same foreign invoice settled	1,100 - 1,083.33	$16.67 exchange loss in this illustration

The example assumes the GST conversion and original attribution are valid. The later exchange difference is separate from the original $100 GST. Original ASBG worksheet; all example figures are fictional.

The lower bank receipt doesn't mean the customer was given a $16.67 discount. They paid the full US$715. Nor does it mean sales GST should automatically fall from $100. Distinguish an exchange movement from an actual agreed change to the price.

Keep fees outside the rate calculation

If the payment provider deducts a fee, show the gross converted settlement and the fee separately. Save its statement or invoice. Otherwise, dividing the net bank receipt by the original foreign amount can produce a misleading "exchange rate" that includes fees.

For each conversion, retain the original invoice, date selected, source URL or rate record, currency pair, calculation precision and final rounded amount. Your agent should be able to reproduce the Australian-dollar result without relying on a screenshot of a current exchange-rate widget.

Investigate adjustments and import documents separately

A later price reduction, refund or cancellation needs its own GST adjustment review. Don't apply the settlement example to a genuinely changed transaction. Likewise, customs valuation of imported goods uses its own rules; the supplier-invoice conversion isn't necessarily the import-GST calculation.

The tax-invoice guide explains the surrounding document requirements. Keep rate records with the invoice under your record-keeping routine, including the software report used for the BAS.

Continue with the next question

• GST on overseas software: check the subscription invoice
• Imported goods: reconcile customs GST and supplier bills

Key takeaways

• Establish Australian GST treatment before doing the conversion.
• Save the rate's direction, source, date and calculation.
• Separate settlement exchange differences, fees and genuine price changes.

Where to get help

Use GSTR 2001/2 with a registered agent to confirm your conversion policy. Find related international-purchase and invoice guidance in Bookkeeping and BAS.