Fiscal year

A fiscal year (or financial year, or sometimes budget year) used by governments for accounting and budget purposes, which varies between countries. It is also used for financial reporting by businesses and other organizations. Laws in many jurisdictions require company financial reports to be prepared and published on an annual basis, but generally, do not require the reporting period to align with the calendar year (1 January to 31 December). Taxation laws generally require accounting records to be maintained and taxes calculated on an annual basis, which usually corresponds to the fiscal year used for government purposes. The calculation of tax on an annual basis is especially relevant for direct taxation, such as income tax. Many annual government fees—such as Council rates, license fees, etc.—are also levied on a fiscal year basis, while others are charged on an anniversary basis. Some companies—such as Cisco Systems—end their fiscal year on the same day of the week each year, i.e. the day that is 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. The calendar year is used as the fiscal year by 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 being in Australia, New Zealand and Japan. Many universities have a fiscal year which ends during the summer to align the fiscal year with the academic year (and, in some cases involving public universities, with the state government's fiscal year), and because the university is normally less busy during the summer months. In the northern hemisphere this is July to the next June. In the southern hemisphere this is calendar year, January to December. Some media/communication-based organizations use a broadcast calendar as the basis for their fiscal year. The fiscal year is usually denoted by the calendar year in which it ends, so United States federal government spending incurred on 14 November 2019 would belong to fiscal year 2020, operating on a fiscal calendar of October–September. 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. Some federal countries, such as Canada and Switzerland, require the provincial or cantonal tax year to align with the federal year. In the United States, most states retained a 30 June fiscal year-end date when the federal government switched to 30 September in 1976. Nearly all jurisdictions require that the tax year be 12 months or 52/53 weeks. However, short years are permitted as the first year or when changing tax years.