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All companies have a financial year end (FYE) date that is important as it determines the timeline of when certain financial reports such as annual returns and corporate taxes are due, as part of its statutory compliance.
The FYE of a company is usually on 31 December, but does not necessarily have to be so. Newly incorporated companies are allowed to decide their FYE date, and some other common choices include 31 March, 30 June and 30 September.
How your FYE date affects the filing of annual returns?
For companies with FYE ending on or after 31 August 2018, listed and non-listed companies are required to file annual returns within 5 months and 7 months respectively, after their FYE.
For companies having a share capital and a branch register outside Singapore, listed and non-listed companies are required to file annual returns within 6 months and 8 months respectively, after their FYE.
Annual returns can only be filed after an Annual General Meeting (AGM) has been held, after financial statements have been sent, and after the FYE.
Factors to consider when deciding your FYE
- Business Cycle
As the peak seasons differ across various types of companies, companies should decide on a FYE date which is ideal for their business cycle. For example, consumer retail companies usually have their peak season during the December period, and thus may prefer to have their FYE on 31 January to account for the bulk of their sales.
- Eligibility for tax exemption schemes
For companies that are covered under the tax exemption scheme for start-ups, it will be beneficial to have the FYE as close to 12 months as possible to maximise tax benefits. As such, newly incorporated companies may prefer to set their FYE on the last day of the 11th month from the date of incorporation.
- Presence of parent company
For subsidiary companies, the FYE is usually set to align with that of their holding companies in order to simplify the tax procedures across both companies.
How to change your FYE?
For any subsequent change in FYE, companies are required to notify ACRA by filing a notification for “Change of Financial Year End” in the Bizfile website. There is no fee imposed for this transaction.
Additionally, companies have to inform the Inland Revenue Authority of Singapore (IRAS) by logging in to mytax.iras.gov.sg and updating via the corporate profile/ contacts details in the e-portal. This is important for IRAS to determine when to send the Estimated Chargeable Income (ECI) filing notification letter. Generally, the FYE date can only be changed for the current or immediate previous FYE.
However, under Section 198(5), certain companies cannot change their FYE without prior approval by ACRA. These include companies which:
- Changes in FYE result in a financial year longer than 18 months
- FYE was changed within the last 5 years
For these companies, a director’s resolution should be prepared and signed prior to informing ACRA.
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