Fiscal year

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 all over the world. 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.

The fiscal year end (FYE) is the date that marks the end of the fiscal year. Some companies choose to end their fiscal year such that it ends on the same day of the week each year, e.g., the day that's 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. A major corporation that has adopted this approach is 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.

The NFL uses the term, "league year," which in effect forms the league's fiscal year. By rule, the fiscal year begins at 4 PM EDT on 10 March of each calendar year. All financial reports are based on each fiscal year. However, the fiscal year is denoted in the NFL by the year where it starts, not where it ends, unlike most designations.

The fiscal year is denoted by the year in which it ends, so United States of America federal government spending incurred on 14 November 2016, would belong to fiscal year 2017, operating on a fiscal calendar of October–September.[4]

Operation in various countries/region

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.

Afghanistan

In Afghanistan, the fiscal year was recently changed from 1 Hamal - 29 Hoot (21 March - 20 March) to 1 Jadi - 30 Qaus (21 December - 20 December). The fiscal year runs with the Afghan calendar, thus resulting in difference of the Gregorian dates once in a four-year span.

Australia

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).[5] This fiscal year definition is used both for official purposes and by the overwhelming majority of private enterprises, but this is not legally mandated.[6] 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.

Austria

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

Bangladesh

In Bangladesh, the fiscal year starts on 1 July and ends on 30 June.

Belarus

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

Brazil

In Brazil, the fiscal year starts on 1 January and ends on 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.

Bulgaria

In Bulgaria, the fiscal year matches the calendar year both for personal income tax [7] and for corporate taxes.[8]

Canada

In Canada,[9] the government's financial year runs from 1 April to 31 March (Example 1 April 2015 to 31 March 2016 for the current financial year).

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

China

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.

Colombia

In Colombia, the fiscal year starts 1 January ending on 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.

Costa Rica

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.

Egypt

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

France

The fiscal year matches the calendar year, and has since at least 1911.[10]

Hong Kong

In Hong Kong,[11] the government's financial year runs from 1 April to 31 March (Example 1 April 2015 to 31 March 2016 for the current financial year).

India

In India, the government's financial year runs from 1 April to 31 March midnight. Example: 1 April 2015 to 31 March 2016 for the financial year 2015–2016. It is also abbreviated as FY16.[12][13]

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. Companies following Indian fiscal year get to know their economical health on 31 March of every Indian financial or fiscal year.

Iran

In Iran, the fiscal year starts usually on March 21 (1st of Farvardin) and concludes on next year's March 20 (29th of Esfand) in Solar Hijri calendar [14]

Ireland

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)

Since 2002, it is aligned with the calendar year: 1 January to 31 December.[15]

Italy

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

Japan

In Japan,[16] 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 2015 to 31 March 2016 is called 2015–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.

Mexico

In Mexico the fiscal year is the same as the calendar year.

Myanmar/Burma

In Myanmar,[17] the fiscal year goes from 1 April to 31 March.

Nepal

The fiscal year in Nepal starts from Shrawan 1 (4th month of Bikram calendar) and ends on Ashad 31 (3rd month of Bikram calendar). Shrawan 1 roughly falls on mid July. [18]

New Zealand

The New Zealand Government's fiscal[19] and financial reporting[20] year begins on 1 July and concludes on 30 June[21] of the following year and applies to the budget. The company and personal financial year[22] begins on 1 April and finishes on 31 March and applies to company and personal income tax.

Pakistan

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.

Russia

The fiscal year matches the calendar year, and has since at least 1911.[10]

Singapore

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

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

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

South Africa

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

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.

South Korea

In South Korea(Republic of Korea) the fiscal year starts on 1 January and ends 31 December.

Spain

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

Sweden

The fiscal year for individuals runs from 1 January to 31 December.[23]

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

However, all calendar months are allowed. If an organisation wishes to change into a non-calendar year, permission from the Tax Authority is required.[24][25]

Taiwan

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.[26]

Thailand

The Thai government's fiscal year (FY) begins on 1 October and ends on 30 September of the following year.[27] FY2015 dates from 1 October 2014 – 20 September 2015. The Thai government's year for individual income tax is the calendar year (1 January – 31 December)

Ukraine

In Ukraine, the fiscal year matches with the calendar year which starts on January 1 and ends December 31.

United Arab Emirates

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

United Kingdom

In the United Kingdom,[28] the financial year runs from 1 April to 31 March for the purposes of corporation tax[29] and government financial statements.[30] 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.[31]

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.

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.

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.[32][33][34]

United States

Federal government

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 2016, often written as "FY2016" or "FY16", which began on 1 October 2015 and which will end on 30 September 2016.

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.[35]

For example, the United States government fiscal year for 2016 is:

State governments

State governments set their own fiscal year. It may or may not align with the federal calendar. For example, in California, the state's fiscal year runs from July 1 to June 30 each year.[36]

Businesses and organizations

The tax year for a business is governed by the fiscal year it chooses. A business may choose any consistent fiscal year that it wants; however, for seasonal businesses such as farming and retail, a good account practice is to end the fiscal year shortly after the highest revenue time of year. Consequently, most large agriculture companies end their fiscal years after the harvest season, and most retailers end their fiscal years shortly after the Christmas shopping season.

Chart of various fiscal years

By Country
Country Purpose (Jul) (Aug) (Sep) (Oct) (Nov) (Dec) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec (Jan) (Feb) (Mar)
Australia
Austria
Brazil
Canada govt
corp. and pers.
China
Costa Rica
Egypt
Hong Kong
India
Iran 21 March
Germany
Japan govt
corp. and pers.
Nepal 17 July
Netherlands
New Zealand govt
corp. and pers.
Pakistan
Portugal
Republic of Ireland
Russia
Singapore govt
pers
South Africa
South Korea
Spain
Sweden pers.
corp.
Switzerland pers.
Taiwan
Thailand
United Arab Emirates
United Kingdom pers. 6 April
corp. and govt
United States govt
Country Purpose (Jul) (Aug) (Sep) (Oct) (Nov) (Dec) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec (Jan) (Feb) (Mar)

Tax year

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.[37] 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.[38] However, short years are permitted as the first year or when changing tax years.[39]

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

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.[38]

See also

References

  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. ↑ "Definition of fiscal year investopedia.com".
  5. ↑ ATO (7 November 2012). "Guide to lodging your tax return". Retrieved 26 February 2013.
  6. ↑ ASIC. "Changing a financial year". Retrieved 9 July 2014.
  7. ↑ "Ar. 15 of the Act on Taxes on the Income of Physical Persons".
  8. ↑ "Ar. 21, Para. 1 of the Act on Corporate Income Taxation".
  9. ↑ 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.
  10. 1 2 "British and Foreign Naval Power.". Retrieved 5 January 2016.
  11. ↑ "The World Factbook". Retrieved 5 January 2016.
  12. ↑ "The World Factbook". Retrieved 5 January 2016.
  13. ↑ "Why financial year & calendar year differ in India?". Reuters. 10 November 2008.
  14. ↑ "Iran announces budget for coming fiscal year". Yahoo news. March 2, 2014. Retrieved October 17, 2015.
  15. ↑ "Ireland-Key Tax Dates 2015". www.taxback.com. Retrieved 2015-12-01.
  16. ↑ "The World Factbook". Retrieved 5 January 2016.
  17. ↑ "The World Factbook". Retrieved 5 January 2016.
  18. ↑ RSS. "Lawmakers stress on changing Fiscal Year". ekantipur. Kantipur Publications. Retrieved 13 February 2016.
  19. ↑ "Annual Report". Retrieved 5 January 2016.
  20. ↑ "New Zealand International Financial Reporting Standards (NZIFRS)". Retrieved 5 January 2016.
  21. ↑ "Year End Financial Statements". Retrieved 5 January 2016.
  22. ↑ "Important dates". Inland Revenue. Retrieved 5 January 2016.
  23. ↑ "Sweden". The World Factbook. Central Intelligence Agency. Retrieved 1 May 2014.
  24. ↑ "Skatteverket". Retrieved 19 May 2015.
  25. ↑ "Bolagsverket". Retrieved 19 May 2015.
  26. ↑ "Investing in Taiwan". Taiwan Investment Guide. 2008.
  27. ↑ "Economy; Thailand; Fiscal Year". The World Factbook: Thailand. US Central Intelligence Agency. Retrieved 17 Feb 2015.
  28. ↑ "The World Factbook". Retrieved 5 January 2016.
  29. ↑ "Corporation Tax". Retrieved 5 January 2016.
  30. ↑ HM Treasury Accounts Direction 2008–09
  31. ↑ HM Revenue & Customs: Self Employed, retrieved October 2013
  32. ↑ "Key Dates for UK Tax Year 2015/2016". www.taxback.com. Retrieved 2015-12-01.
  33. ↑ Joseph, Pat (2008). Tax Answers at A Glance 08 09 (illustrated ed.). Lawpack Publishing Ltd. p. 5. ISBN 1-905261-81-0.
  34. ↑ 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.
  35. ↑ The Statutes at Large and Treaties of the United States of America, Volume 5. Boston: Charles C. Little & James Brown. 1856. pp. 536–537.
  36. ↑ "California Budget - California Department of Finance". www.dof.ca.gov. Retrieved 2015-04-10.
  37. ↑ See, e.g., U.S. IRS Publication 538.
  38. 1 2 "26 U.S. Code § 441 - Period for computation of taxable income". LII / Legal Information Institute. Retrieved 5 January 2016.
  39. ↑ 26 USC 443.
  40. ↑ See instructions to IRS Form 1128 and 26 USC 441–444.
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