Year in Year out

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. Fiscal year may also refer to the year used for income tax reporting.

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. Many major corporations, including Tesco, adopt this approach.

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 Zeland 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. 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 Australian government’s financial 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.

In Canada, Hong Kong and India the government’s financial year runs from April 1 to March 31.

In China the fiscal year for all entities starts on January 1 and ends December 31, consistent with the calendar year, to match the tax year, statutory year, and planning year.

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

In Japan, the government’s financial year runs from April 1 to March 31. 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 April 1, 2010 to March 31, 2011 is called 2010-nendo. Japan’s income tax year runs from January 1 to December 31, but corporate tax is charged according to the corporation’s own one-year period.

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 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 governement fiscal year for 2011 (“FY 2011” or “FY11”) is as follows:

• 1^st Quarter: October 1, 2010 – December 31, 2010;

• 2^nd Quarter: January 1, 2011 – March 31, 2011;

• 3^rd Quarter: April 1, 2011 – June 30, 2011;

• 4^th Quarter: July 1, 2011 – September 30, 2011.