Overview
Foreign Cash Investments or Foreign Bank Accounts can be recorded under the account code 60400/Bank Accounts. This makes recording increases and decreases in the value of the foreign currency simple and facilitates recording foreign exchange gains and losses.
Note
BGL does not provide accounting or taxation advice. This article is designed to act as a guide for Simple Fund 360 and Simple Invest 360. It is not designed to be accounting or tax advice and should not be taken as a strict guideline. Other methods that are more suitable may be used instead of these steps.
Instructions
| From the Main Toolbar, go to Accounting. |
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| Select Chart of accounts from the list. |
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You can create a bank account as normal through the Chart of Accounts.
- Click Add Account and select Bank:
- Enter the details for the new Foreign Cash Investment / Foreign Bank account and click save.
For more instructions on how to set up a bank account, click here.
- Click Add Account and select Other:
- Set the Account Class to Normal, then enter a code and name for this Account.
These Forex Gain/Loss accounts need to be created within the following account ranges:- Forex Gain - Income Account: 20000 - 29999
- Forex Loss - Expense Account: 30000 - 39999
- Ensure the tax label is set up correctly for the account.
FOR Simple Fund 360 - click More Details and select the appropriate SMSF Tax Label:
FOR Simple Invest 360 - This will need to be completed after clicking save and posting a transaction to Forex Gain/Loss. For further instructions, see Tax Labels for Trusts. - Click Save.
Transactions for Foreign Cash Investments
Currently, the calculation of the AUD value for foreign currency transactions will need to be done manually. This includes transactions related to Unrealised Movement and Foreign Exchange Gain/Loss.
To record unrealised movement related to this Foreign Bank Account, typically resulting from changes to the exchange rate, post a Debit or Credit to the Foreign Bank Account offset by posting to 24700/Changes in Market Values of Investments.
For example:
If the value of the Foreign Currency increases by $500 AUD, the following transaction applies:
| Account | Debit ($) | Credit ($) |
| 60400/Foreign Bank | $500 | |
| 24700/Changes in Market Values of Investments | $500 |
Note: As this is a manual transaction to 24700, the following message will display. This transaction does not post to any investment account and so the warnings included in this message can be ignored.
From the General Journal screen post adjustments to asset/investment and Debit/Credit the expense or income account which were created in the "Add Income and Expense Accounts to record Foreign Exchange Gain/Loss" section above.
For example:
$1000 USD is disposed of and transferred back to the Australian bank account.
- $1000 USD is worth $1500 AUD at the time of transfer, resulting in $500 Foreign Exchange Gain:
| Account | Debit ($) | Credit ($) |
| 60400/USD Bank | $1000 | |
| 60400/AUD Bank | $1500 | |
| 20000 range account - Forex Gain | $500 |
However, a Foreign Exchange Loss of $500 on disposal would result in the following transaction:
| Account | Debit ($) | Credit ($) |
| 60400/USD Bank | $1000 | |
| 60400/AUD Bank | $500 | |
| 30000 range account - Forex Loss | $500 |