Ads keep this website free for you. does not research or endorse any product or service appearing in ads on this site.  Before making a major financial decision you  should consult a qualified professional.

Choosing a Year-End Date
Canadian Tax and
Financial Information
Need an accounting, tax or financial advisor? Look in our Directory.  Use above search box to easily find your topic!   Stay Connected with!


Home  ->   Business  -> Choosing a year-end date for a self-employed individual

Self-Employed Individuals - Choosing a Year-end When Starting Your Business

You can choose a year-end after December 31, so that you can defer tax on your first fiscal year until the calendar year in which the first year-end occurs.  However, you will still have to pay tax based on a December 31 year-end once your first fiscal year is completed.  Thus, you would be paying tax on more than 12 months of income when you first pay tax on your self-employment income.

For example, if you choose a June 30 year-end for your self-employment business which started on July 1, 2021, you would not have to report income from this business on your 2021 tax return.  You would have to elect on form T1139 (link below) to have a June 30 year-end.  On your 2022 tax return you would report the income for your fiscal year ending June 30, 2022.  Then you would have to add an amount for estimated earnings for July 1 to December 31, 2022.  You would thus be paying tax on 18 months of income, which may put you in a much higher tax bracket.

You can later convert to a December 31 year-end, so you could then eliminate the calculation of the estimated amount, and use your actual earnings instead.  This is done by cancelling your prior election, again on form T1139.  You would complete Part 5 of the form, to change back to a fiscal period ending on December 31.  Once you have cancelled the election, you cannot change your fiscal year-end again.

If you will have a loss from self-employment for the first 6 months in the example above, it would be better to use a December 31st year-end in order to offset the loss against other income in that year.

Canada Revenue Agency (CRA) Resources

Form T1139 Reconciliation of Business Income For Tax Purposes

T4002 Self-employed Business, Professional, Commission, Farming and Fishing Income

T4002 - How to report your self-employment income - fiscal period

Change of fiscal year-end

Revised: January 16, 2023


Copyright © 2002 Boat Harbour Investments Ltd. All Rights Reserved.  See Reproduction of information from

Facebook  | Twitter  |  See What’s New, stay connected with by RSS or Email
The information on this site is not intended to be a substitute for professional advice.  Each person's situation differs, and a professional advisor can assist you in using the information on this web site to your best advantage. 
Please see our legal disclaimer regarding the use of information on our site, and our Privacy Policy regarding information that may be collected from visitors to our site.