A fiscal year is the 12-month period a business uses for accounting and tax, which does not have to align with the calendar year.
Your fiscal year-end is the date your books close and your tax year ends. Individuals use the calendar year, but a corporation can choose any fiscal year-end, and the choice is a genuine planning decision made at incorporation. A year-end can be picked to smooth seasonal income, defer tax, or simplify a business's natural cycle.
The fiscal year-end drives every deadline: the T2 is due six months after it, balances are due two or three months after it, and instalments key off it. Changing a fiscal year-end later requires CRA approval, so it is best chosen deliberately at the start.
A retailer whose busiest period is December might choose a January 31 fiscal year-end, so that year-end inventory counts and accounting fall in a quieter month rather than during the holiday rush.
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