Canadian Governments Fiscal Year

Canadian Government's Fiscal Year If youve ever dealt with publicly-traded companies or government entities, you know that they keep a different calendar for things such as quarterly earnings and budget  reporting. In most cases (but not all), the fiscal year calendar they follow isnt the standard January 1 through December 31. For the purposes of bookkeeping and financial reporting, companies and governments in most countries follow whats known as a fiscal year. Simply put, a fiscal year is the financial year of an organization for accounting purposes. Its a 52-week period that doesnt end on Dec. 31. The fiscal year for most American companies, especially those listed on a public stock exchange, is typically July 1 to June 30.   The calendar a company or organization follows is what determines how its taxes and expenditures are calculated by taxing bodies such as the Internal Revenue Service in the U.S. or the Canada Revenue Agency in Canada.   Canadas Fiscal Year The fiscal year of the Canadian federal government and the countrys provincial and territory governments is April 1 to March 31, just like most other British commonwealths (and Britain itself). This is different than the tax year for Canadian citizens, however, which is the standard January 1 to December 31 calendar year. So if youre paying personal income taxes in Canada, youll follow the calendar year. There are some circumstances under which a Canadian business may request a change to its fiscal year calendar. This requires a written appeal to the Canada Revenue Service, and it cant be done just to get a particular tax advantage or for reasons of convenience. If youre seeking a change to your fiscal year, be prepared to explain why to the CRA. Heres an example of a potentially valid reason for changing a companys fiscal year: Joes Swimming Pool Supply and Repair Company operates 12 months out of the year, but he sells fewer swimming pools and does fewer maintenance calls in the winter than in the spring and summer. For Joe, it makes fiscal sense for him to operate on a fiscal year calendar that more closely aligns with the natural cycle of the business. Reasons for a Fiscal Year Calendar For companies that are legally required to have their financial returns audited, it may be more cost-effective to hire auditors and accountants at a slower time of year, when tax preparers are in lower demand. Thats not the only reason to follow an alternate calendar. For school districts, following a fiscal year that closely matches the school year (July 1 to June 30, for example) makes more sense than a calendar year that ends when the school year is barely half over. Retail businesses that see most of their revenue come in the form of holiday gift purchases may opt to include December and January in the same quarter for revenue reporting purposes, rather than letting December skew the entire years financial results.