(a) Yes. (b) No.

(a) Once again it depends. Each year end has its merits. Here is a list of year ends with commentary on how it would work in a Canadian company with Canadian filings deadlines.

January 31

This once was a popular year end when we used to be on the system that allowed you to report your income on the last day of the fiscal year and pick it up in the calendar year that the last day of the fiscal year came in. Now that the rules have changed to make this less possible (not impossible) we find January year ends falling out of favor. The advantage used to be a 23 month delay was possible between earning income and reporting it for taxes.

February 28(29)

This has never been popular in our client base. It conflicts with other deadlines like T4 slips and rarely aligns with other business cycles

March 31

Popular with businesses that do business with governments. Government year ends in Canada are march 31. So having your year end match your customer year end is a smart business strategy.

April 30

Also not popular. Probably because it conflicts with other deadlines like personal tax returns

May 31

Uncommon but not unheard of. No real advantages or disadvantages

June 30

Uncommon. Better than a May year end because if matches a quarterly cycle which many businesses use. But misses one of the favorite tax deferral tools used in Canada. See July to see why June missed the boat

July 31

Very popular. Makes available the 179 day delay on bonuses. A bonus declared retroactively to July 31 can be delayed and paid in January of the following calendar year. Thus makes it possible to delay the recognition of income and thus the tax on that income. This is why January  31 used to be popular.

August 31

Also popular for the same reasons as July

September 30

Also popular and has the advantage of falling on a calendar quarter.

October 31

Less popular than September but still common and has advantage of capturing much of the calendar year and leaving ample time before the spring deadlines. So you can use this year end and spread your deadlines around a bit. First a fiscal tax deadline then a T4 slips deadline and then a personal tax deadline. It works better than having deadlines all aligned on the same day.

November 30

Less popular than October but still has some of the same advantages

December 31

By far still the most popular year end. Despite having terrible timing from a deadline point of view and tax deferral point of view. You have deadlines almost all lined up at the same time for corporate tax, payroll tax and personal tax. You can’t defer income as effectively. Yet the traditional December year end is still popular.

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