Debt Dictionary

Fiscal Year

Investment Dictionary -> Fiscal Year

The term fiscal year refers to a time period, usually a 12 month period, which a company or another organization uses for accounting purposes. The legislation that regulates accounting stipulates that companies should issue financial statements every twelve months. The fiscal year may vary depending on the regulatory laws of each country. Notably most of the time, the fiscal year coincides with the calendar year. The term is always referred to by the end date of the fiscal year. For instance, if a company ends its fiscal year on November 30, 2008 the period between December 1, 2008 and November 30, 2008 comprises the fiscal year. This period will be referred to as fiscal year 2008. Companies gain actual benefits by not using the calendar year. They may close the company’s records at a time of their convenience.

However, there are some institutional as well as country-specific exceptions to this rule. The higher educational institutions typically commence the fiscal year at the beginning of the school year and complete it during the summer. The purpose is to have a match between the fiscal year and the school year. Furthermore, some states have different regulations in view of the fiscal year. The Australian law stipulates that the fiscal year commences on July 1 and finishes on June 30 of the next calendar year. This regulation is applicable to the federal budget, the personal income tax, as well as the fiscal year of most companies. Similarly, the fiscal year of the government of New Zealand starts on July 1 and ends on June 30 of the following calendar year. The financial year of legal entities commences on April 1 and ends on March 31. This timeframe also applies to the personal income tax. In other countries such as Canada, Hong Kong, India, and Japan, the fiscal year of the government authorities begins on April 1 and finishes on March 31.

For example: Royal Bank of Canada fiscal year end on October 31 each year.

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