8 September 2022
The Income Tax Act provides specifically that certain amounts expressed in a foreign currency must be translated into rand by the application of an applicable average exchange rate.
- Table A – A list of the average exchange rates of selected currencies for a year of assessment as from December 2003
- Table B – A list of the monthly average exchange rates to assist a person whose year of assessment is shorter or longer than 12 months
The term “average exchange rate” is defined in section 1(1) of the Act and means, in relation to a year of assessment, the average exchange rate determined by using the closing spot rates at the end of daily or monthly intervals during a year of assessment. This rate must be applied consistently within that year of assessment.
The South African Reserve Bank (SARB) determines weighted average exchange rates, based on the foreign exchange transactions of commercial banks. SARS publishes these rates on a quarterly basis, which may be used by stakeholders (taxpayers) in the determination of the average exchange rate when required in the Act.
The next update can be expected in December 2022.
You can read the SARS announcement and access Table A, Table B and an example:How to calculate Average Exchange Rates for a period longer than 12 months here.
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