Fiscal year
Learn what a fiscal year is, how it works in Canada, and how to choose your business fiscal year-end.
Published Thursday 23 July 2026
Table of contents
Key takeaways
- A fiscal year is a 12-month period a business uses for accounting and tax reporting, and it doesn't have to match the calendar year.
- The Government of Canada's fiscal year runs from April 1 to March 31, but your own business can choose a different fiscal year-end.
- Self-employed individuals generally use a December 31 year-end, while corporations can choose a fiscal period of up to 53 weeks (371 days).
- Corporations file a T2 return within six months of their fiscal year-end, and self-employed individuals file their T1 by June 15.
What is a fiscal year?
A fiscal year is a 12-month period a business, government or organization uses for small business accounting and tax reporting. It doesn't have to match the calendar year that runs from January 1 to December 31.
Many businesses pick a fiscal year that fits their trading pattern. A retailer might run its fiscal year from February 1 to January 31 to close the books after the holiday rush, while a farm might choose November 1 to October 31 to line up with the harvest.
A fiscal year is usually named after the year in which it ends. A fiscal year running from April 1, 2025 to March 31, 2026 is called fiscal 2026.
Fiscal year vs calendar year vs tax year
These three terms overlap, but they aren't always the same period. Here's how each one works in Canada:
- Calendar year: the 12 months from January 1 to December 31
- Fiscal year: the 12-month accounting period you choose, which can start in any month
- Tax year: the period the Canada Revenue Agency (CRA) uses to assess tax, following the calendar year for personal income tax and the fiscal period for corporations
When does the fiscal year start and end in Canada?
In Canada, the government's fiscal year runs from April 1 to March 31. The Government of Canada's fiscal year begins on April 1 and ends on March 31 in the following calendar year, as set out by the Treasury Board of Canada Secretariat reporting cycle.
Your own business doesn't have to follow that schedule. You can choose a fiscal year-end that suits how your business operates, as long as it meets the CRA's rules.
Fiscal year for Canadian businesses
How you set your fiscal year depends on your business structure. Sole proprietors and self-employed individuals follow different rules than incorporated businesses.
If you're self-employed, you generally have to use a December 31 year-end. Eligible individuals can elect an alternative fiscal period by filing Form T1139 with the CRA.
Your filing deadline follows your business type. Self-employed individuals file their T1 return by June 15, though any balance owing is due April 30.
If you run a corporation, you choose your fiscal year-end when you start out. A corporation's tax year is its fiscal period, which cannot be longer than 53 weeks (371 days).
A corporation files its T2 return within six months of the end of its fiscal year. The exact due date depends on the month your year-end falls in.
Why your fiscal year matters
Your fiscal year shapes when you report, when you pay tax and how you measure performance. It affects several parts of running your business:
- Financial reporting: your income statement and balance sheet cover your fiscal year
- Tax compliance: deadlines for corporate income tax (T2), GST/HST and personal income tax (T1) hinge on your fiscal year-end or the calendar year
- Budgeting: you plan spending and forecasts around your fiscal year
- Performance tracking: you compare results from one fiscal year to the next
- Seasonal alignment: a well-chosen year-end lets you close the books after your busy season
How to choose your fiscal year-end
Picking the right fiscal year-end can make your bookkeeping and accounting easier to manage. Weigh these factors before you decide:
- Revenue cycle: end your year after your busiest trading period so the books reflect a full cycle
- Industry norms: match common practice in your sector to make benchmarking simpler
- Tax planning: choose a date that spreads income and deductions in a way that suits your business
- Cash flow: pick a year-end when you'll have funds available to cover any tax owing
You aren't locked in for good. You can change your fiscal year-end through the Canada Revenue Agency if your needs change.
Simplify your year-end reporting with Xero
Xero brings your accounts together so you're ready when your fiscal year-end arrives. Bank feeds pull in your transactions automatically, and clear reports show where your business stands at any point in the year.
Stay on top of your numbers and file with confidence, whatever year-end you choose. Try Xero and see how much time you can save at reporting time. Get one month free.
FAQs on fiscal year
Here are some frequently asked questions about fiscal years in Canada.
What is the fiscal year in Canada?
The Government of Canada's fiscal year runs from April 1 to March 31. Businesses can choose their own fiscal year-end to suit how they operate.
Do sole proprietors have to use a December 31 year-end?
Generally, yes. Self-employed individuals usually use a December 31 year-end, though eligible individuals can elect an alternative fiscal period with Form T1139.
Can a corporation choose its own fiscal year-end?
Yes. A corporation sets its own fiscal year-end, as long as its fiscal period is no longer than 53 weeks (371 days).
When is a T2 return due?
A corporation files its T2 return within six months of the end of its fiscal year. The precise date depends on your year-end.
What is the difference between a fiscal year and a calendar year?
A calendar year always runs from January 1 to December 31. A fiscal year is any 12-month accounting period, and it can start in a different month.
Related terms
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Disclaimer
This glossary is for small business owners. The definitions are written with their requirements in mind. More detailed definitions can be found in accounting textbooks or from an accounting professional. Xero does not provide accounting, tax, business or legal advice.