Exchange rates and business visas – Converting foreign currencies to AUD

Converting foreign currencies to AUD for Business visa purposes– about exchange rates

Business visa requirements specify values in Australian dollars (AUD).

Documentation provided in support of visa applications often report values in foreign currencies, particularly for offshore visa applications. Values in foreign currencies must be converted to AUD to assess requirements relating to turnover and the net value of assets using the most appropriate exchange rate.

An exchange rate is the ratio of exchange for two currencies and may vary from day‑to‑day.

Calculating exchange rates

The Department of Home Affairs calculates the AUD equivalent value of annual turnover on the basis of the buying exchange rate:

• in the local currency for AUD on the closing rate at the relevant reporting date, that is:
• the date/s recorded on the financial statements at the beginning and end of a reporting period (for example, 1 February 2012 and 1 February 2013) or
• the last day of the fiscal year.

DHA calculate the AUD equivalent value of assets on the basis of the buying exchange rate on the date used to assess the net value of personal assets. This buying exchange rate must be:

• published by any bank holding an Australian Banking Licence

and

• published on an approved currency conversion website.

An approved currency conversion website is defined as a website that:

• uses exchange rates published by any bank holding Australian Banking Licence,
• provides exchange rates for the relevant currency,
• supports the use of historical exchange rates, and
• consistently provides accurate formulated calculations.

An example of an approved currency conversion website is at www.oanda.com.

Hyperinflation

If there is hyperinflation of currency in a country (for example Iran), the exchange rate needs to be realistic in order to enable the calculation of a realistic amount for possible transfer to Australia. Hyperinflation is inflation that is very high or uncontrolled, a condition in which prices increase rapidly as a currency loses its value.

Currency conversion that:

• results in an unrealistic value (for example, 1000 foreign dollars equals less than 1 cent Australian) or
• appears to fluctuate with noticeably inconsistent results

might indicate that the currency in that country is subject to hyperinflation. The International Accounting Standards Board defines hyperinflation in IAS 29 as the cumulative inflation rate over 3 years is approaching, or exceeds, 100%. If the official exchange rate is unrealistic, the use of the spot rate is preferred.

It is possible for a country’s currency to become worthless due to hyperinflation and not be accepted by any financial institution outside the country of origin. Should this occur, consideration would be given as to whether the assets are capable of being transferred to Australia within 2 years (as required by 188.