Loss on Foreign Exchange & Taxable Income
Makerester111
Member Posts: 2
For some quick background, i'm a sole trader business operating out of Australia working across multiple currencies (I Invoice in the currency of the recipient)
After using Wave for a few weeks and importing my backlog of invoices I noticed my physical numbers (income and expenses) and new numbers on Wave don't add up.
After doing some reading I discovered that Wave automatically tracks my income as whatever exchange rate it uses on that given day, then lists the discrepancy between their exchange rate, and what I received (My inputted exchange rate) as a Loss on Foreign Exchange.
I know taxation laws may differ across countries, but am I to be 'claiming' taxable income on money I never received?
If I invoice 500USD, receive 600AUD, and Wave tells me the real rate means I should've got 650, then on reports I will use for annual earnings it will say I 'earned' 650, and lost 50. As far as taxation goes, I'm now paying tax on 50$ extra that I never earned.
OR, are Losses on foreign exchange Tax deductions on taxable income?
I understand paying tax on foreign exchange gains, but paying taxes on losses seem's ridiculous.
Does anyone have any insights into this?
Comments
@Samantha_Priday1990 I'm not sure if you also work remotely, but wanted to tag you here just in case.