Goods and Services Tax: Foreign Currency Conversion Determination 2018

The determination is compact and revolves around a small set of tightly specified concepts. Each concept directly governs how a foreign-currency amount is converted to Australian dollars for GST valuation.

• Your particular exchange rate. Defined in s 6, this is the single rate an entity elects from a closed list to convert foreign currency amounts. The options are: (a) the RBA rate, (b) a rate published by a foreign exchange organisation, (c) an agreed rate between supplier and registered recipient, or (d) for offshore low value goods, a rate specified under a separate determination. The determination mandates consistent use of the chosen rate (s 5).

• Conversion day. The conversion day determines which daily exchange rate applies. For entities that account on a basis other than cash, it is the earlier of the day on which any of the consideration for the supply is received, or the transaction date or invoice date, whichever the entity has chosen (s 6(a)). For cash-basis entities, it is the transaction date, or the invoice date, or the day consideration is received (s 6(b)). For certain non-resident registrants making particular cross-border supplies, the conversion day can be the final day of the relevant tax period in which GST is payable; the rules differ for non-residents that are limited registration entities and those that are not (s 6(c)-(d)).

• RBA rate and RBA business day. The RBA rate is the RBA’s unit of foreign currency per A$ as specified at 4:00 pm Australian Eastern time on the RBA business day or the previous RBA business day if the conversion day is not an RBA business day (s 6, RBA rate). RBA business day itself is defined as a day the RBA’s head office is open.

• Agreed rate and arm’s-length requirement. The agreed rate is a rate agreed between a supplier and a registered recipient, but if the supplier and recipient are associates, the agreed rate must reflect the rate that would be agreed by parties dealing at arm’s length (s 6, agreed rate). The agreed rate only applies for supplies made under the agreement and for the period of the agreement.

• Exchange rate definition. The determination defines “exchange rate” as the unit of foreign currency per Australian dollar (s 6). That framing sets the numerator and denominator explicitly for calculations.

• Interaction with accounting standards. The term “transaction date” is the date used for foreign currency conversion in the entity’s accounting system under the relevant Accounting Standard (s 6, transaction date). The determination therefore defers to accounting practice for selecting a transaction date.

• Cross-references. The determination supplies its own definitions but states that other expressions have the same meaning as in the GST Act (s 6 final sentence). It also references the separate low-value-goods determination for a specific category of supplies.

These concepts together determine: who chooses the date and the rate; the universe of permissible rate sources; and the requirement to apply those choices consistently. The instrument is technical and procedural rather than normative about policy or penalties.

The determination explicitly applies to an “entity that works out the value of a taxable supply in Australian currency using the method in section 5, because an amount of the consideration for the supply is expressed in a foreign currency” (s 4). That language captures a defined and functional subset of GST-registered persons and others required to value supplies in Australian dollars where consideration is denominated, wholly or partly, in another currency.

Primary affected parties

• Suppliers and entities that calculate the value of taxable supplies where any part of the consideration is in foreign currency. The instrument addresses the conversion method they must use to express the consideration in Australian dollars (s 4; s 5).

• Non-resident registrants who supply inbound intangible consumer supplies or offshore supplies of low value goods. The determination sets out special conversion-day options for such non-resident suppliers, distinguishing between those that are limited registration entities and those that are not (s 6(c)-(d)). These special rules alter which date’s rate is used and therefore affect how GST on those supplies is calculated.

Secondary affected parties and stakeholders

• Registered recipients. Where an agreed rate is used between a supplier and a registered recipient, the recipient is a party to that agreement; the agreed rate’s arm’s-length constraint applies if the parties are associates (s 6, agreed rate).

• Tax advisers, accountants and compliance officers. They must advise clients on selecting and documenting “your particular exchange rate”, determining the appropriate conversion day in each supply, and ensuring consistency of application across supplies (s 5; s 6).

• Foreign exchange organisations and the RBA. The determination references rates published by publicly providing foreign exchange organisations and the RBA’s 4:00 pm AET rate; these bodies therefore provide source data that entities may rely on (s 6, foreign exchange organisation; RBA rate).

Who is not specifically captured

• Entities that do not convert foreign-currency consideration into Australian dollars because the consideration is already in Australian currency are outside the instrument’s scope (s 4). The determination does not apply to valuation issues unrelated to foreign-currency conversion.

• The instrument does not itself create registration obligations, tax liabilities, or penalties. Those matters remain within the GST Act and related legislation, although this determination prescribes the conversion method used to determine Australian-dollar values feeding into those regimes (s 6, final sentence).

Practical implications for affected parties

• Entities that deal in multiple currencies must make an explicit choice of a permitted rate source and conversion-date approach, and they must document and apply that choice consistently to GST calculations (s 5; s 6).

• For related-party transactions, agreed exchange rates require arm’s-length justification. This creates a compliance and evidentiary requirement whenever associates elect an agreed rate (s 6, agreed rate).

• Non-resident suppliers of inbound intangibles and low value goods have an additional compliance decision: whether to use the conversion day tied to the tax period rather than transaction/invoice/receipt dates (s 6(c)-(d)).

Overall, the instrument affects the mechanics of GST valuation for any entity facing foreign-currency consideration and prescribes choices that affect the timing and quantum of GST reported and payable.

The determination imposes specific duties on entities that convert foreign-currency consideration into Australian dollars for GST valuation and recognises a narrow set of rights, namely the right to choose among specified rate sources and conversion-date options subject to constraints.

Duties

• Apply the prescribed conversion formula. Section 5 requires entities to convert the amount expressed in foreign currency by multiplying that amount by “your particular exchange rate” on the conversion day. The duty is operational: the conversion must be done using that formula.

• Use the chosen exchange rate consistently. Section 5 mandates that “you must use your particular exchange rate consistently.” The duty is to apply one selected source and method uniformly, across supplies, in a manner consistent with the entity’s choice.

• Select an eligible “particular exchange rate”. Section 6 defines permissible choices for “your particular exchange rate”: the RBA rate, a rate published by a foreign exchange organisation, an agreed rate, or, for taxable supplies of offshore low value goods, a rate chosen under the specified low value goods determination. The duty is to select one of these options; selection outside this closed list would not satisfy the determination.

• For agreed rates between associates, ensure the agreed rate reflects arm’s-length pricing. The agreed-rate definition in s 6 requires that where the supplier and recipient are associates, the agreed rate must reflect the rate agreed by parties dealing at arm’s length. The duty is evidential: the agreed rate must correspond to what independent parties would have agreed.

• Determine the conversion day in accordance with accounting method and registration status. Section 6 supplies rules for conversion day depending on whether the entity uses cash accounting or another accounting basis, and differentiates non-resident and limited-registration entities. The duty is to apply the correct conversion-day rule to each supply type.

• Where the RBA rate is used, apply the RBA’s 4:00 pm AET rate on the RBA business day or, if the conversion day is not an RBA business day, the 4:00 pm rate on the previous RBA business day (s 6, RBA rate). This prescribes both the precise time and the fallback if the conversion day is not an RBA business day.

Rights and choices

• Right to choose the permitted rate source. An entity has the right to elect among the listed rate sources for “your particular exchange rate” (s 6). That election is a substantive right within the determination’s bounds.

• Right to elect transaction-date or invoice-date for non-cash accounting. For entities accounting on a basis other than cash, the conversion day is the earlier of receipt date or the transaction date or invoice date, “whichever you have chosen” (s 6(a)(ii)). That language gives the entity a choice to adopt either transaction date or invoice date as its internal convention.

• For cash-basis entities, right to choose among three conversion-day triggers. Section 6(b) permits the conversion day to be the transaction date, invoice date, or the day consideration is received. The entity has the right to choose which of those it will use in practice, subject to the general consistency requirement in s 5.

• For certain non-resident registrants, right to substitute the final day of the relevant tax period as conversion day. Sections 6(c)-(d) grant non-residents (limited or not) the option to treat the final day of the tax period as the conversion day for inbound intangible consumer supplies and offshore supplies of low value goods, with varying application to other supplies.

Design and compliance implications of duties and rights

• The combination of mandatory consistency and permitted choice channels regulatory certainty into a limited number of permissible practices. The duty to use a single selected rate consistently reduces variance but imposes an administrative obligation to document and maintain that choice.

• The arm’s-length requirement for agreed rates adds a substantive evidentiary duty in related-party transactions. An agreed rate is not an unfettered private contract term when the parties are associates; it must reflect market terms per s 6.

• The RBA rate definition removes ambiguity about which RBA publication and time should be used, but it also requires entities using the RBA rate to be aware of business-day mechanics and the previous-business-day fallback.

• The determination does not itself grant relief, exemptions, or penalty powers. Duties and rights are confined to the conversion mechanics; enforcement and sanctions, if any, derive from the GST Act and associated administrative regimes referenced at the end of the definitions (s 6 final sentence).

The determination itself does not create a standalone penalty or enforcement regime. It is a conversion method instrument that prescribes methodology and definitions; it is silent on criminal or civil penalties, administrative sanctions, or specific enforcement mechanisms. The final sentence of s 6 states that other expressions in the determination have the same meaning as in the GST Act, signalling that substantive tax liabilities and sanctions remain governed by the GST Act and associated law.

What this means in practice

• No penalty clauses in this instrument. There are no sections within the determination that specify fines, sanctions, or specific enforcement actions tied to failing to adopt the method or applying it incorrectly. Any consequences for failure to apply the conversion method must therefore arise through the GST Act, taxation administration law, or general law.

• Enforcement will therefore be exercised under the GST Act and general taxation administration mechanisms. The determination’s prescriptive method feeds into how an entity calculates the taxable value of a supply; the amount reported and the tax liability declared under the GST Act can be material to compliance reviews, assessments, and audits. The determination itself does not purport to substitute or override those enforcement regimes.

• Administrative and documentary consequences. While the determination does not specify record-keeping penalties, the requirement to use “your particular exchange rate consistently” and to select a conversion day tied to accounting practice implies a need for contemporaneous evidence demonstrating the chosen approach. In practice, tax administration processes will look to the entity’s records to verify that the conversion method set out by this determination was followed.

Points of enforcement attention an auditor is likely to have, on the basis of the instrument

• Consistency of application. An auditor will likely check that an entity used a single chosen rate source and that the choice was applied consistently across identical or similar supplies in the relevant period, as required by s 5.

• Arm’s-length support for agreed rates between associates. Where an agreed rate is used and the parties are associates, enforcement will focus on evidence that the rate reflects an arm’s-length outcome, per s 6 agreed rate.

• Appropriate conversion-day determination. Inspectors will check that the conversion day used aligns with the entity’s GST accounting basis and the non-resident special rules, as set out in s 6 conversion day.

• Accurate application of the RBA rate specification. For entities using the RBA rate, auditors will verify that the correct RBA 4:00 pm AET figure has been used and that the previous-business-day fallback has been applied correctly where the conversion day is not an RBA business day (s 6, RBA rate).

Limits on what the instrument enforces

• The determination does not itself authorise recovery, penalties, or prosecution. The consequences of non-compliance are not specified here; they would be those available under the GST Act and tax administration law.

• The determination does not itself create remedial obligations such as mandatory adjustments or specific record-retention durations. Any such obligations would derive from general tax law or administrative practice rather than from this determination.

In sum, the instrument prescribes methodology and definitions, but enforcement, penalties and remedial powers remain matters for the GST Act and the tax administration framework.

The determination cross-references and interacts with several legal instruments and concepts. The text explicitly anchors meanings and some definitions to the GST Act and to the Reserve Bank Act 1959 through the definition of the Reserve Bank of Australia. It also points to a separate determination for a subset of supplies.

Direct cross-references within the instrument

• GST Act. The determination states that “Other expressions in this determination have the same meaning as in the GST Act” (s 6 final sentence). That express cross-reference integrates the determination into the broader GST statutory language framework. It means terms not defined in this determination will be interpreted by reference to the GST Act when applying the conversion rules.

• Reserve Bank Act 1959. The determination defines “Reserve Bank of Australia” as the body corporate continued under the Reserve Bank Act 1959 (s 6 definition). The RBA rate and RBA business day definitions therefore rely on the institutional existence and functions set out in that statute.

• Accounting standards. The definition of “transaction date” is the date used for foreign currency conversion in the entity’s accounting system under the relevant Accounting Standard (s 6, transaction date). The determination therefore defers to accounting standard practice for one of the key dating concepts used in conversion.

• Goods and Services Tax: Foreign Currency (Customs Value of Low Value Goods) Determination 2018. For taxable supplies of offshore supplies of low value goods, the determination permits the use of a rate chosen under that separate instrument (s 6, your particular exchange rate para (d)). That cross-reference signals coordinated rule-making for specific cross-border supply categories.

Operational interactions to note

• Interaction with GST valuation and reporting. The determination supplies the conversion step necessary for expressing foreign-currency consideration in Australian dollars; it is a piece of the wider GST valuation and reporting process governed by the GST Act. The selection of conversion-day and rate feeds directly into the taxable value declared under the GST Act.

• Interaction with transfer-pricing/related-party rules. The agreed-rate arm’s-length requirement for associates (s 6, agreed rate) links the conversion methodology to transfer-pricing principles. Although the instrument does not reference transfer-pricing law explicitly, it incorporates an arm’s-length test that will require alignment with broader tax law practice and evidence standards applicable to related-party transactions under the GST Act and other tax laws.

• Interaction with administrative practice and audits. While the determination prescribes method and definitions, enforcement and administrative audits proceed under the taxation administration framework. The determination’s requirements will be used as the measuring stick for whether conversion and valuation practices satisfy GST reporting obligations.

Potential areas where interaction may raise issues

• Accounting standards vs GST rules. The determination allows the entity to rely on the transaction date defined by its accounting system under relevant Accounting Standards (s 6). Discrepancies between accounting recognition principles and GST timing rules could generate interpretive questions about which date applies for GST conversion, particularly where timing differences exist under different accounting frameworks.

• Multiple instruments for low value goods. The cross-reference to the separate low value goods determination may require entities dealing in such supplies to reconcile the rate chosen under that instrument with the consistency requirement of this determination. The precise mechanics are governed by the referenced instrument for that supply category.

• RBA rate mechanics and market rates. For entities that use rates published by foreign exchange organisations, the determination requires those organisations to provide rates publicly (s 6, foreign exchange organisation). Entities must therefore ensure the rates they rely on are in a form that can be reconciled to the legal definition, which interacts procedurally with market data vendors and their terms of publication.

Limitations on scope of interaction

• The determination does not amend or displace substantive provisions of the GST Act beyond the conversion step. It is a method instrument intended to be applied within the GST statutory framework.

• The determination does not itself prescribe or modify broader tax administration processes such as assessments, objections, penalties, or criminal sanctions. Those remain within the remit of the GST Act and taxation administration law.

In sum, the determination is a technical instrument that operates within the GST statutory and administrative framework, and it deliberately defers to the GST Act, accounting standards, and other specific determinations for concepts and specialised rules.

This instrument contains a short, explicit amendment history within its own text. The operative amendment is a repeal and replacement of the prior instrument:

• Repeal and replacement. Section 3 states that this determination “repeals and replaces the Goods and Services Tax: Foreign Currency Conversion Determination (No. 1) 2017 (the previous determination) - F2017L00845, registered on 30 June 2017.” The effect is that the 2017 determination is no longer operative from this determination’s commencement.

• Commencement date. Section 2 specifies that the determination commences on 1 July 2018. Therefore the repeal of the 2017 determination and the operative effect of this instrument both begin on that date.

What the text does not include

• No subsequent amendments recorded in the instrument. The provided text does not list any later amending determinations or versions. The instrument itself is the 2018 version and, within its text, only records the repeal of the 2017 predecessor. There are no subsections or schedules indicating later amendments.

• No transitional provisions included. The instrument does not set out transitional rules, savings clauses, or explicit retroactive application. Its commencement clause simply states the date it commences (s 2). The absence of transitional provisions in the text means that any transitional treatment would need to be found elsewhere, if at all, or be constructed by reference to administrative practice under the GST Act.

Implications for practitioners

• When working across the repeal point, practitioners must note that the 2017 determination is replaced from 1 July 2018. Where historical compliance is relevant to an audit or retrospective adjustment, advisers must consult the 2017 text for pre-1 July 2018 periods and this determination for periods from 1 July 2018.

• Because the instrument is concise and self-contained, any subsequent amending instruments or superseding determinations would need to be tracked externally. The instrument itself does not list an amendment schedule.

• For entities that adopted the 2017 instrument’s methods, the replacement suggests continuity in policy but practitioners should verify any textual differences between the 2017 and 2018 texts (the repeal and replace language means the 2018 text is the operative authority from the commencement date).

In summary, the only recorded amendment event in this document is the repeal of the 2017 determination and its replacement with this 2018 text effective 1 July 2018. No further amendments are recorded within the provided instrument.

The determination’s text does not record any litigation history. It names no cases, contains no references to court decisions, and does not include any litigation-related footnotes or annotations. Therefore there is no litigation history contained within the instrument itself to report.

Areas of the determination likely to generate disputes

Because litigation history is absent, it is useful to identify the provisions that are most likely to be the subject of future dispute if parties or tax authorities diverge in their interpretation or application. These areas are identifiable from the text of the instrument itself.

• The arm’s-length requirement for agreed rates between associates. Section 6’s definition of “agreed rate” requires that, where supplier and recipient are associates, the agreed rate must reflect the rate agreed to by parties dealing at arm’s length. Disputes could arise over what constitutes adequate evidence that an agreed rate reflects arm’s-length terms or how to price comparable arrangements. The instrument provides the requirement but not the evidentiary standard; assessment of whether the requirement is met would likely involve broader tax law principles and, if contested, could proceed to administrative or judicial review under the GST Act framework.

• Choice and application of conversion day. The conversion day rules for entities accounting on a basis other than cash, for cash-basis entities, and for non-resident limited-registration or non-limited registrants (s 6 conversion day) present multiple selectable dates. Disagreements may arise about which date applies to a given supply, especially in complex cross-border transactions involving partial receipts, invoicing practices, or ambiguous transaction dates as defined by accounting standards. Because the instrument defers to the entity’s chosen accounting convention for “transaction date,” disputes could hinge on the interpretation of accounting standards and their interaction with tax law.

• Definition and use of “exchange rate.” The instrument defines “exchange rate” as the unit of foreign currency per Australian dollar (s 6). In practice, market data sources often publish reciprocal conventions. Disputes may arise if a taxpayer uses a reciprocal or misinterprets the numerator/denominator relationship, leading to different Australian-dollar amounts. The instrument is explicit on the definition, however, which will assist resolution.

• Application of RBA rate fallback rules. The RBA rate is defined as the RBA 4:00 pm AET rate on the RBA business day or the previous RBA business day if the conversion day is not an RBA business day (s 6, RBA rate). Disputes might arise over the identification of an RBA business day in exceptional circumstances or over which RBA publication or table should be used to extract the 4:00 pm figure.

What the instrument’s silence implies about litigation

• Because the instrument does not specify penalties, litigation about punitive measures will reference the GST Act and tax administration law rather than this instrument. The determination will be evidence of the correct conversion method, but liability disputes and penalties would be adjudicated under the GST Act.

• The determination’s procedural focus means disputes will tend to be about fact and application rather than about statutory interpretation of broad policy terms. The text provides discrete, technical tests and definitional anchors; hence contested matters are likely to be transactional details rather than open-ended legal questions.

Practical advice for litigation preparedness

• Preserve contemporaneous documentation of the chosen “particular exchange rate,” the conversion day chosen for each supply, evidence supporting any agreed rate between associates, and the source of any published rate used. The instrument’s consistency requirement (s 5) implies that documentation will be the primary evidence in assessing compliance.

• Where the RBA rate is used, maintain a record of the RBA publication consulted, the exact 4:00 pm AET figure, and the rationale for selecting previous-business-day figures if applicable.

• For non-resident registrants relying on the tax-period conversion-day option, document the election and the method used to allocate supplies to the relevant tax period.

Conclusion on litigation history

The determination itself contains no litigation record. It sets technical rules that, if contested, will generate disputes focused on evidential matters and the application of the defined concepts. Any litigation would proceed within the broader GST and tax-administration framework referenced by the instrument.

This determination contains several provisions that can produce practical pitfalls if overlooked. The following points distil technical traps and compliance risks that arise directly from the text.

1. Consistency requirement is mandatory and broad (s 5). The instrument requires that “you must use your particular exchange rate consistently.” Practitioners should note that consistency is not limited to identical supplies; the absence of a qualification suggests a general expectation of consistent application across the taxpayer’s GST calculations. Failure to demonstrate consistent application may invite challenge in audit, even where the chosen rate was reasonable in isolation.

2. The definition of “exchange rate” fixes the numerator and denominator (s 6). Exchange rate is defined as the unit of foreign currency per Australian dollar. Market quotes are sometimes reported the other way around. Using a reciprocal figure by mistake will produce materially different Australian-dollar values. The instrument is explicit; the correct orientation must be applied.

3. Transaction date is accounting-standard dependent (s 6). The “transaction date” used for conversion is the date in the entity’s accounting system under the relevant Accounting Standard. If an entity’s accounting policy is inconsistent, or if the accounting standard permits alternative dates, the choice may affect the conversion-day selection and therefore the GST base. Entities must be careful when their accounting treatment varies across jurisdictions or over time.

4. For non-cash vs cash accounting, conversion-day rules differ and the entity has choices (s 6(a)-(b)). Non-cash accounting entities must use the earlier of receipt date or the chosen transaction/invoice date. Cash-basis entities can use transaction date, invoice date, or receipt date. If an entity changes accounting method or does not have a consistent choice between transaction date and invoice date, its conversion day could change, affecting GST outcomes.

5. Non-resident complexity (s 6(c)-(d)). Non-residents that are not limited registration entities have a bifurcated rule: they may use the conversion day rules in paragraphs (a) or (b) for any types of supplies, or for inbound intangibles and low value goods they can instead use the final day of the relevant tax period. Limited registration entities can use either the day specified in (a) or (b) or the final day of the tax period for supplies. The availability of tax-period conversion days for certain non-residents means that using different conversion days for different supplies is permissible, but it must be done correctly; mixing approaches without clear documentation can cause errors.

6. Agreed rate is temporal and supply-specific (s 6, agreed rate). The agreed rate “only applies for supplies made under the agreement and for the period of the agreement.” This limits the applicability of an agreed rate. Practitioners must ensure the scope and duration of the agreement are clear and that the agreed rate is not applied outside its covered supplies or period.

7. Arm’s-length standard for associates (s 6, agreed rate). Where supplier and recipient are associates, the agreed rate must reflect arm’s-length terms. The determination does not specify how that is to be proved; taxpayers should therefore retain market comparators or other evidence. The absence of a detailed evidentiary standard elevates the importance of contemporaneous documentation.

8. RBA rate timing and business-day fallback (s 6, RBA rate). The RBA rate is defined as the 4:00 pm AET rate on the RBA business day or, if the conversion day is not an RBA business day, the 4:00 pm rate of the previous RBA business day. Misidentifying an RBA business day or using the wrong day’s RBA table will produce incorrect conversions.

9. Foreign exchange organisation must provide rates publicly (s 6, foreign exchange organisation). The instrument’s definition requires that the foreign exchange organisation “provides exchange rates publicly.” Practically, this excludes private or proprietary rates that are not publicly accessible. Taxpayers relying on commercial data vendors must ensure the source qualifies as a “foreign exchange organisation” under this definition.

10. The determination does not prescribe penalties or record-retention periods. Because the instrument is silent on sanctions and record-keeping, taxpayers cannot rely on the determination for evidence of required retention periods. Instead, they should observe the GST Act’s administrative requirements and maintain clear records demonstrating the conversion choice, the source rate, and the conversion-day rationale.

11. Cross-references to other instruments. For offshore supplies of low value goods, a separate determination governs the selection of a rate (s 6(d)). Failing to consult the referenced determination may lead to using a rate that is not authorised for that supply category.

12. The instrument applies only where “an amount of the consideration” is expressed in a foreign currency (s 4). If only part of the consideration is foreign-denominated, the conversion method still applies to that part. Splitting consideration between currencies requires careful allocation to ensure the correct conversion is used for each portion.

13. No explicit transitional provisions for the 2017 repeal (s 3). The repeal and replacement of the 2017 instrument is effective 1 July 2018, but the determination contains no transition guidance. Practitioners should ensure they apply the correct instrument for each tax period, especially when reconciling periods spanning the repeal.

These “gotchas” are concrete operational traps derived directly from the determination’s text. Weighing them into compliance practice and documentation is the primary means of mitigating the associated risks.

Compliance under this determination is about procedural choices, consistent application, and documenting the basis for those choices. The following practical steps are directly grounded in the instrument’s provisions.

1. Identify whether the determination applies. Confirm the supply’s consideration is expressed, wholly or in part, in a foreign currency. The instrument applies when “an amount of the consideration for the supply is expressed in a foreign currency” and the entity uses the method in s 5 to work out the value of the taxable supply in Australian currency (s 4).

2. Select your particular exchange rate from the permitted list and document the choice. The permitted options are: (a) the RBA rate, (b) a rate published by a foreign exchange organisation, (c) an agreed rate between supplier and registered recipient, or (d) for taxable supplies of offshore supplies of low value goods, a rate chosen under the relevant low-value-goods determination (s 6, your particular exchange rate). Record the selection in an accounting policy memo or a compliance note, including the exact named source, URL or publication page, and the date of election.

3. If using an agreed rate, ensure the scope and duration are explicit and, where parties are associates, obtain arm’s-length support. The agreed rate “only applies for supplies made under the agreement and for the period of the agreement,” and when parties are associates the agreed rate must reflect the arm’s-length rate (s 6, agreed rate). Draft the agreement to specify the supplies covered and effective dates. Gather contemporaneous benchmarking or documentation demonstrating arm’s-length terms if the parties are associates.

4. Determine the conversion day for each supply in accordance with your GST accounting method and registration status. For non-cash accounting, conversion day is the earlier of receipt or the transaction date/invoice date, depending on which of the latter two you have chosen (s 6(a)). For cash-basis accounting, conversion day can be transaction date, invoice date or date of receipt (s 6(b)). For non-resident registrants with inbound intangible consumer supplies or offshore low value goods, either use the paragraphs (a)/(b) day or the final day of the relevant tax period as allowed by s 6(c)-(d). Document the accounting policy choice for transaction date vs invoice date where applicable.

5. Apply the RBA rate correctly if chosen. If you elect the RBA rate, use the RBA’s 4:00 pm Australian Eastern time unit of foreign currency per $A for the applicable RBA business day. If the conversion day is not an RBA business day, use the previous RBA business day’s 4:00 pm rate (s 6, RBA rate). Save a capture of the RBA table or publication showing the exact figure and the publication timestamp.

6. Ensure currency-quote orientation matches the definition. The determination defines exchange rate as the unit of foreign currency per Australian dollar (s 6). Confirm that the rate you apply has the correct orientation and, if using a published table that uses the reciprocal orientation, convert appropriately.

7. Use the formula in s 5 and be consistent. Convert by multiplying the amount expressed in the foreign currency by your particular exchange rate on the conversion day (s 5). Apply the selected rate source consistently across similar supplies and across reporting periods as required by s 5. Where a change is necessary, record the policy reason for the change and the date it takes effect.

8. Keep contemporaneous records and evidence. While the determination does not set record-retention periods, the conversion method will form part of the GST calculation and auditors will require evidence of the chosen rate and conversion day. Maintain: the conversion-day determination for each supply, the source and copy of the exchange-rate table or agreement, evidence supporting arm’s-length assertions for agreed rates between associates, and working papers demonstrating the arithmetic.

9. Reconcile GST reporting to the conversion method. Include the converted Australian-dollar values in GST returns in the manner required by the GST Act. Reconcile your GST filings to the conversion calculations and maintain cross-references to the rate source and conversion-day rationale.

10. For non-resident limited-registration entities, verify the tax-period option. If you are a non-resident that is a limited registration entity or not, and you supply inbound intangible consumer supplies or offshore low value goods, check whether electing the final day of the tax period as the conversion day is advantageous and ensure the election is applied consistently and documented clearly (s 6(c)-(d)).

11. Coordinate with accounting and treasury functions. Because the “transaction date” defers to Accounting Standards and because treasury often controls FX arrangements and data feeds, ensure coordination across teams to produce consistent treatment in accounting records and GST reporting.

12. Update policies on repeal and replacement. Note that this instrument replaced the 2017 determination effective 1 July 2018 (s 2-3). Ensure your policies apply the correct determination for the correct tax period.

13. Seek targeted advice where facts are borderline. If supplies cross the low value goods threshold or involve complex associated-party arrangements, consider advising clients or obtaining a binding ruling or tailored advice under the GST Act, because the determination itself does not resolve related-party valuation or transfer-pricing evidentiary standards.

By following these steps,selecting and documenting an eligible rate source, choosing and documenting a conversion day in accordance with the entity’s accounting method, applying the formula in s 5, and preserving contemporaneous evidence,entities can demonstrate conformity with the methodology prescribed in this determination.