A financial year is the 12-month cycle a business uses for its annual accounts. A business chooses its own year-end, so its financial year may or may not line up with the tax year.
What it means
The financial year sets when annual financial statements are prepared and when the books are closed for the year. A company might run a financial year to end of June, while the individual tax year runs to end of February. The two are separate timelines, and a business keeps track of both for different purposes.
Where it fits in
Payroll figures feed both: the monthly payroll cost flows into the financial year's accounts, while the PAYE and certificates follow the SARS tax year. Where the two year-ends differ, a single tax year's payroll can straddle two financial years.
Key rules
- The 12-month period a business reports on.
- The business chooses its own year-end.
- Need not match the SARS tax year (March to February for individuals).
- One tax year's payroll can fall across two financial years.
