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 (i.e., January through December). Fiscal years vary between businesses and countries.
In addition, many companies find that it is convenient for purposes of comparison and for accurate stock taking to always end their fiscal year on the same day of the week, where local legislation permits. Thus some fiscal years will have 52 weeks and others 53. Major corporations that adopt this approach include
Cisco Systems and
Tesco.
In the
United Kingdom, 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.
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 and elsewhere (with notable exceptions
Australia,
New Zealand and
Japan).
Many
universities have a fiscal year which ends during the summer, both to align the fiscal year with the
school year, and because the school is normally less busy during the summer months.
Some media/communication based organizations use a
Broadcast calendar as the basis for their fiscal year.
Operation in various countries
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.
United States
The U.S. government's fiscal year begins on October 1 of the previous calendar year and ends on September 30 of the year with which it is numbered. Prior to 1976, the fiscal year began on July 1 and ended on June 30. The
Congressional Budget and Impoundment Control Act of 1974 stipulated 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 July 1, 1976 to September 30, 1976. As stated above, the tax year for a business is governed by the fiscal year it chooses.
For example, the
United States government fiscal year for 2010 ("FY10", sometimes written "FY09–10") is as follows:
- 1st Quarter: October 1, 2009 – December 31, 2009
- 2nd Quarter: January 1, 2010 – March 31, 2010
- 3rd Quarter: April 1, 2010 – June 30, 2010
- 4th Quarter: July 1, 2010 – September 30, 2010
Australia
The
Australian government's fiscal year begins on July 1 and concludes on June 30 of the following year. This applies for personal income tax and the federal budget, and most companies are required to use it as their own.
Pakistan
The
Government of Pakistan's fiscal year starts on July 1 of the previous calendar year and concludes on June 30. Private companies are free to observe their own accounting year, which may not be the same as fiscal year.
New Zealand
The
Government of New Zealand's fiscal and financial reporting year begins on July 1 and concludes on June 30 of the following year and applies to the budget. The company and personal financial year begins on April 1 and finishes on March 31 and applies to company and personal income tax.
Canada, India, Hong Kong, Japan
In
Canada,
Hong Kong,
India, and
Japan, the government's financial year runs from April 1 to March 31.
Japan's
income tax year runs from January 1 to December 31, but
corporate tax is charged by their own one year period.
United Kingdom
In the
United Kingdom, the fiscal year for the purposes of personal taxation and payment of state benefits runs from April 6 to April 5. However the year should run from April 1 to March 31 for the purposes of corporation tax and government financial statements
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.
The April 5 year end for personal tax and benefits reflects the old
ecclesiastical calendar, with
New Year falling on March 25 (
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 April 5, which was the "
old style" new year of March 25. A 12th skipped Julian leap day in 1800 changed its start to April 6. It was not changed when a 13th Julian leap day was skipped in 1900, so the personal tax year in the
United Kingdom is still April 6.
Ireland
Ireland also used the year ending April 5 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).
United Arab Emirates
In the
United Arab Emirates, the fiscal year starts on January 1 and ends December 31.
China and Taiwan
The fiscal year for all entities starts on January 1 and ends December 31, consistent with the calendar year, to match the tax year, statuatory year, and planning year.
Under the Income Tax Act of Taiwan, the fiscal year commences on January 1 and ends on December 31 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.
See also
