Fiscal year

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A fiscal year (or financial year, or sometimes budget year) is a period used for calculating annual ("yearly") financial statements in businesses and other organizations. In many jurisdictions, regulatory laws regarding accounting and taxation require such reports once per twelve months, but do not require that the period reported on constitutes a calendar year (that is, 1 January to 31 December). Fiscal years vary between businesses and countries. The "fiscal year" may also refer to the year used for income tax reporting.

Some companies choose to end their fiscal year on the same day of the week, such day being the one closest to a particular date (for example, the Friday closest to 31 December). Under such a system, some fiscal years will have 52 weeks and others 53 weeks. Major corporations that adopt this approach include Cisco Systems.[1]

Nevertheless, the fiscal year is identical to the calendar year for about 65% of publicly traded companies in the United States and for a majority of large corporations in the UK[2] and elsewhere (with notable exceptions Australia, New Zealand and Japan).[3]

Many universities have a fiscal year which ends during the summer, both to align the fiscal year with the school year (and, in some cases involving public universities, with the state government's fiscal year), and because the school is normally less busy during the summer months. In the northern hemisphere this is July in one year to June in the next year. In the southern hemisphere this is January to December of a single calendar year.

Some media/communication based organizations use a broadcast calendar as the basis for their fiscal year.

Operation in various countries/region[edit]

In some jurisdictions, particularly those that permit tax consolidation, companies that are part of a group of businesses must use nearly the same fiscal year (differences of up to three months are permitted in some jurisdictions, such as the U.S. and Japan), with consolidating entries to adjust for transactions between units with different fiscal years, so the same resources will not be counted more than once or not at all.[citation needed]

Afghanistan[edit]

In Afghanistan, the fiscal year is recently changed from 1 Hamal- 29 Hoot (21 March - 20 March) to 1 Jadi- 30 Qaus (21 December to 20 December). The fiscal year runs with the Afghan calendar, thus resulting in difference of the Gregorian dates once in a four year span (for further reference refer to: www.af.legaloracles.com)

Australia[edit]

In Australia, the fiscal year or, more commonly, "financial year", starts on 1 July and ends on 30 June. For personal income tax after the financial year ends, individuals have until 31 October to lodge their return (unless they use a tax agent).[4] This fiscal year definition is used both for official purposes and by the overwhelming majority of private enterprises, but this is not legally mandated.[5] A company may, for example, opt for a financial year that always ends at the end of a week (and therefore is not exactly one calendar year in length), or opt for each financial year to end on a different date to match the reporting cycles of its foreign parent.

Belarus[edit]

In Belarus, the fiscal year starts on 1 January and ends on 31 December.

Brazil[edit]

In Brazil, the fiscal year starts in 1 January and ends in 31 December. Citizens pay income tax (when needed) starting in May, but the form filling goes from March to April. All tax declarations must be done on-line using government written free software.[citation needed]

Colombia[edit]

In Colombia, the fiscal year starts 1 January ending in 31 December. Yearly taxes are due in the middle of March/April for Corporations while citizens pay income tax (when needed) starting in August, ending in September, according to the last 2 digits of the national ID.[citation needed]

Costa Rica[edit]

The fiscal year in Costa Rica spans from 1 October until 30 September. Taxpayers are required to pay the tributes before 15 December of each year.[citation needed]

Canada[edit]

In Canada,[6] the government's financial year runs from 1 April to 31 March (Example 1 April 2014 to 31 March 2015 for the current financial year).

For individuals in Canada, the fiscal year runs from 1 January to 31 December.

China[edit]

The fiscal year for all entities starts on 1 January and ends 31 December, consistent with the calendar year, to match the tax year, statutory year, and planning year.[citation needed]

Egypt[edit]

In the Arab Republic of Egypt, the fiscal year starts on 1 July and concludes on 30 June.[citation needed]

France[edit]

The fiscal year matches the calendar year, and has since at least 1911.[7]

Hong Kong[edit]

In Hong Kong,[8] the government's financial year runs from 1 April to 31 March (Example 1 April 2014 to 31 March 2015 for the current financial year).

India[edit]

In India, the government's financial year runs from 1 April to 31 March midnight. Example: 1 April 2014 to 31 March 2015 for the financial year 2014–2015. It is also abbreviated as FY15.[9][10]

Companies following the Indian Depositary Receipt (IDR) are given freedom to choose their financial year. For example, Standard Chartered's IDR follows the UK calendar despite being listed in India.

Iran[edit]

In the Iran, the fiscal year starts usually on 1 farvardin and concludes on 29 esfand in Solar_Hijri_calendar(21 March - 20 March).[citation needed]

Ireland[edit]

Ireland used the year ending 5 April until 2001 when it was changed, at the request of Finance Minister Charlie McCreevy, to match the calendar year (the 2001 tax year was nine months, from April to December)[citation needed]

Since 2002, it is aligned with the calendar year: 1 January to 31 December.[citation needed]

Italy[edit]

In Italy the fiscal year was from 1 July to 30 June until 1965; now it is from 1 January until 31 December.[citation needed]

Japan[edit]

In Japan,[11] the government's financial year runs from 1 April to 31 March. The fiscal year is represented by the calendar year in which the period begins, followed by the word nendo (年度); for example the fiscal year from 1 April 2014 to 31 March 2015 is called 2014–nendo.

Japan's income tax year runs from 1 January to 31 December, but corporate tax is charged according to the corporation's own annual period.[citation needed]

Mexico[edit]

In Mexico the fiscal year is the same as the calendar year.[citation needed]

Myanmar/Burma[edit]

In Myanmar,[12] the fiscal year goes from 1 April to 31 March.

New Zealand[edit]

The New Zealand Government's fiscal[13] and financial reporting[14] year begins on 1 April and concludes on 31 March[15] of the following year and applies to the budget. The company and personal financial year[16] begins on 1 April and finishes on 31 March and applies to company and personal income tax.

Pakistan[edit]

The Pakistan Government's fiscal year starts on 1 July of the previous calendar year and concludes on 30 June. Private companies are free to observe their own accounting year, which may not be the same as Government of Pakistan's fiscal year.[citation needed]

Russia[edit]

The fiscal year matches the calendar year, and has since at least 1911.[7]

Singapore[edit]

The fiscal year for the calculation of personal income taxes runs from 1 January to 31 December.[citation needed]

The fiscal year for the Government of Singapore and many government-linked corporations runs from 1 April to 31 March.[citation needed]

Corporations and organisations are permitted to select any date to mark the end of each fiscal year, as long as this date remains constant.[citation needed]

South Africa[edit]

In South Africa the fiscal year for the Government of South Africa starts on 1 April and ends 31 March.[citation needed]

The year of assessment for individuals covers twelve months, beginning on 1 March and ending on the final day of February the following year. The Act also provides for certain classes of taxpayers to have a year of assessment ending on a day other than the last day of February. Companies are permitted to have a tax year ending on a date that coincides with their financial year. Many older companies still use a tax year that runs from 1 July to 30 June, inherited from the British system. A common practice for newer companies is to run their tax year from 1 March to the final day of February following, to synchronize with the tax year for individuals.[citation needed]

Spain[edit]

In Spain the fiscal year starts on 1 January and ends 31 December.[citation needed]

Sweden[edit]

The fiscal year for individuals runs from 1 January to 31 December.[17]

The fiscal year for an organisation is typically one of the following (cf. Swedish Wikipedia):

  • 1 January to 31 December
  • 1 May to 30 April
  • 1 July to 30 June
  • 1 September to 31 August

If an organisation wishes to use any other period, the organisation has to ask the tax authorities for permission.[citation needed]

Taiwan[edit]

Under the Income Tax Act of Taiwan, the fiscal year commences on 1 January and ends on 31 December of each calendar year. However, an enterprise may elect to adopt a special fiscal year at the time it is established and can request approval from the tax authorities to change its fiscal year.[18]

Thailand[edit]

Thai government's fiscal year begins on 1 October of the previous calendar year and ends on 30 September of the next year.[citation needed]

Ukraine[edit]

In Ukraine fiscal year matches calendar year and starts on January 1 and ends December 31 .

United Arab Emirates[edit]

In the United Arab Emirates, the fiscal year starts on 1 January and ends 31 December.[citation needed]

United Kingdom[edit]

In the United Kingdom,[19] the financial year runs from 1 April to 31 March for the purposes of corporation tax[20] and government financial statements.[21] For the self-employed and others who pay personal tax the fiscal year starts on 6 April and ends on 5 April of the next calendar year.[22]

Although United Kingdom corporation tax is charged by reference to the government's financial year, companies can adopt any year as their accounting year: if there is a change in tax rate, the taxable profit is apportioned to financial years on a time basis.[citation needed]

A number of major corporations that were once government owned, such as BT Group and the National Grid, continue to use the government's financial year, which ends on the last day of March, as they have found no reason to change since privatisation.[citation needed]

The 5 April year end for personal tax and benefits reflects the old ecclesiastical calendar, with New Year falling on 25 March (Lady Day), the difference being accounted for by the eleven days "missed out" when Great Britain converted from the Julian Calendar to the Gregorian Calendar in 1752 (the British tax authorities, and landlords were unwilling to lose 11 days of tax and rent revenue, so under provision 6 (Times of Payment of Rents, Annuities, &c.) of the Calendar (New Style) Act 1750, the 1752–3 tax year was extended by 11 days). From 1753 until 1799, the tax year in Great Britain began on 5 April, which was the "old style" new year of 25 March. A 12th skipped Gregorian leap day in 1800 changed its start to 6 April. It was not changed when a 13th Julian leap day was skipped in 1900, so the start of the personal tax year in the United Kingdom is still 6 April.[23][24]

United States[edit]

The United States federal government's fiscal year is the 12-month period ending on 30 September of that year, having begun on 1 October of the previous calendar year. In particular, the identification of a fiscal year is the calendar year in which it ends; thus, the current fiscal year is 2014, often written as "FY2014" or "FY14", which began on 1 October 2013 and which will end on 30 September 2014.

Prior to 1976, the fiscal year began on 1 July and ended on 30 June. The Congressional Budget and Impoundment Control Act of 1974 made the change to allow Congress more time to arrive at a budget each year, and provided for what is known as the "transitional quarter" from 1 July 1976 to 30 September 1976. An earlier shift in the federal government's fiscal year was made in 1843, shifting the fiscal year from a calendar year to one starting on 1 July.[25]

For example, the United States government fiscal year for 2014 is:

  • 1st quarter: 1 October 2013 – 31 December 2013
  • 2nd quarter: 1 January 2014 – 31 March 2014
  • 3rd quarter: 1 April 2014 – 30 June 2014
  • 4th quarter: 1 July 2014 – 30 September 2014

The tax year for a business is governed by the fiscal year it chooses.[citation needed]

Chart of various fiscal years[edit]

By Country
Country Purpose Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Australia
Canada govt
corp. and pers.
China
Costa Rica
Egypt
Hong Kong
India
Iran 21 March
Germany
Japan govt
corp. and pers.
Netherlands
New Zealand govt
corp. and pers.
Pakistan
Portugal
Republic of Ireland
Russia
Singapore govt
pers
South Africa
Spain
Sweden pers.
corp.
Switzerland pers.
Thailand
United Arab Emirates
United Kingdom pers. 6 April
corp. and govt
United States govt
Country Purpose Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Tax year[edit]

The fiscal year for individuals and entities to report and pay income taxes is often known as the taxpayer's tax year or taxable year. Taxpayers in many jurisdictions may choose their tax year.[26] In federal countries (e.g., United States, Canada, Switzerland), state/provincial/cantonal tax years must be the same as the federal year. Nearly all jurisdictions require that the tax year be 12 months or 52/53 weeks.[27] However, short years are permitted as the first year or when changing tax years.[28]

Most countries require all individuals to pay income tax based on the calendar year. Significant exceptions include:

  • United Kingdom: individuals pay tax on a year ending 5 April. This is due to Britain historically having a calendar year starting on 25 March in the Julian calendar, which translates to 6 April in the Gregorian calendar.
  • United States: individuals may (but rarely do) elect any tax year, subject to IRS approval.[29]

Many jurisdictions require that the tax year conform to the taxpayer's fiscal year for financial reporting. The United States is a notable exception: taxpayers may choose any tax year, but must keep books and records for such year.[27]

See also[edit]

References[edit]

  1. ^ MATT RICHTEL (12 May 2004). "Cisco Profit For Quarter Slightly Beats Estimates". The New York Times. The New York Times Company. Retrieved 14 August 2012. 
  2. ^ Thomson ONE Banker, Thomson Reuters Datastream and individual companies (31 March 2011). "FT UK 500 2011" (PDF). Financial Times. The Financial Times Ltd. Retrieved 14 August 2012. 
  3. ^ Australian and New Zealand Chamber of Commerce in Japan (20 April 2011). "Definitions" (PDF). Australian and New Zealand Chamber of Commerce in Japan Constitution. Australian and New Zealand Chamber of Commerce in Japan. Retrieved 14 August 2012. 
  4. ^ ATO (7 November 2012). "Guide to lodging your tax return". Retrieved 26 February 2013. 
  5. ^ ASIC. "Changing a financial year". Retrieved 9 July 2014. 
  6. ^ Department of Justice Canada (1985). "Federal-Provincial Fiscal Arrangements Act". Department of Justice Canada (in English and French). Department of Justice Canada. Retrieved 14 August 2012. 
  7. ^ a b Hansard; HC Deb 22 March 1911 vol 23 cc378; McKenna
  8. ^ CIA – The World Factbook – Hong Kong
  9. ^ CIA – The World Factbook – India
  10. ^ "Why financial year & calendar year differ in India?". Reuters. 10 November 2008. 
  11. ^ CIA – The World Factbook – Japan
  12. ^ CIA – The World Factbook – Burma
  13. ^ Annual Report for the New Zealand Treasury
  14. ^ New Zealand International Financial Reporting Standards
  15. ^ http://www.treasury.govt.nz/government/financialstatements/yearend
  16. ^ New Zealand Inland Revenue tax calendar
  17. ^ "Sweden". The World Factbook. Central Intelligence Agency. Retrieved 1 May 2014. 
  18. ^ "Investing in Taiwan". Taiwan Investment Guide. 2008. 
  19. ^ CIA – The World Factbook – United Kingdom
  20. ^ HM Revenue and Customs Introduction to Corporation Tax
  21. ^ HM Treasury Accounts Direction 2008–09
  22. ^ HM Revenue & Customs: Self Employed, retrieved October 2013 
  23. ^ Joseph, Pat (2008). Tax Answers at A Glance 08 09 (illustrated ed.). Lawpack Publishing Ltd. p. 5. ISBN 1-905261-81-0. 
  24. ^ Steel, Duncan (2000). Marking time: the epic quest to invent the perfect calendar (illustrated ed.). John Wiley and Sons. p. 5. ISBN 0-471-29827-1. 
  25. ^ The Statutes at Large and Treaties of the United States of America, Volume 5. Boston: Charles C. Little & James Brown. 1856. pp. 536–537. 
  26. ^ See, e.g., U.S. IRS Publication 538.
  27. ^ a b 26 USC 441
  28. ^ 26 USC 443.
  29. ^ See instructions to IRS Form 1128 and 26 USC 441–444.