A fiscal year (or financial year, or sometimes budget year) is used in government accounting, which varies between countries, and for budget purposes. 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 feesâsuch as Council rates, license fees, etc.âare also levied on a fiscal year basis, while others are charged on an anniversary basis.
Some companiesâsuch as Cisco Systemsâend 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. It's the case in many countries around the world with a few exceptions, for example, 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 2020 would belong to fiscal year 2021, operating on a fiscal calendar of OctoberâSeptember.