What is a Tax Year?

by Craig Anthony

1 min read

If you run a small business, a year may not necessarily mean a calendar year. Under the Income Tax Act, tax returns and financial statements must be prepared and filed on an annual basis. The date at which the annual accounts are prepared is known as the “tax year-end” or “fiscal year-end.”For individuals and unincorporated partnerships, the tax year ends on December 31, with very few exceptions. For corporations, the tax year can end at any day of the year. Normally, when first creating and organizing the company, a year-end is chosen. It can be any day that is convenient for the business. For example, seasonal businesses may choose a date that matches the end of their operations. Likewise, affiliates often choose the same date as their parent company. After choosing a date, it is usually kept for the entire life of the company. However, it can be changed if there are legitimate business reasons to do so. To obtain a change, the company must ask for the Canada Revenue Agency’s approval. There is no set form for this permission, but the request must be made in writing in a letter that details the reasons for the change.

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