Every company in Singapore is responsible for determining its financial year end (FYE) at the time of incorporation. But, changing a company’s financial year end (FYE) after its incorporation in Singapore is common. The main reason for changing a company’s FYE is to align this with its operating cycles and business activities. This will ensure that the company’s financial statements accurately reflect its financial position and performance.
If your company is thinking about changing its financial year end (FYE), there are a few things to consider before making the switch. As the FYE is decided at the time of incorporation in Singapore, in some cases, as the business operations start, it may make more sense for your business to end its fiscal year on a different date.
Changing Your Company’s FYE
A company’s financial year-end (FYE) is a significant date because after it has passed, a financial report for the relevant financial year must be prepared for purposes such as filing annual returns with the Accounting and Corporate Regulatory Authority (ACRA).
Filing corporate tax returns with the Inland Revenue Authority of Singapore (IRAS) is another significant reason companies choose to adopt a certain financial year end (FYE). This allows businesses to plan, manage their finances, and meet their tax obligations.
A Few Things to Consider Before Changing Your Company’s FYE
Changes in FYE can be made for either the current year or the immediately preceding financial year. However, some restrictions imposed by law may apply.
Companies can change their financial year-end date, provided they haven’t missed any statutory deadlines for holding an Annual General Meeting, filing an Annual Return, or submitting financial statements.
Companies that have passed these statutory compliances’ due dates are not permitted to change their FYE.
Furthermore, you must obtain ACRA’s approval to change your FYE if either of the following two conditions applies:
- The change in your company’s financial year-end will result in a financial year that lasts beyond 18 months.
- You have previously changed your company’s FYE within the last five years; hence, this is not considered a new issue.
Steps to Change the Company’s FYE
With these guidelines in mind, companies wishing to change their FYE can do so by following these simple steps:
1. Notify the Accounting and Corporate Regulatory Authority (ACRA) of the Change
You must notify the Registrar of any change in your company’s financial year end (FYE). You can do this by filing a “Change of Financial Year End” transaction through the BizFile+ website, and this is absolutely free of charge.
A Board Resolution has to be passed in order to approve the change in the FYE.
Companies with a 52-week financial year should notify ACRA of this to avoid having to change their fiscal year-end yearly. Transactions for notification/change of the fiscal year-end will provide for this.
2. Keep the Inland Revenue Authority of Singapore (IRAS) posted on the Change
It is important to keep IRAS up to date on any changes in your financial year-end. You can notify them of any changes by logging into mytax.iras.gov.sg and updating your corporate profile or contact details using the Update Corporate Profile/ Contact Details e-Service.
Based on the updated information about your new financial year, IRAS will send out Estimated Chargeable Income (ECI) notification letters and any other assessments or notices related to your company.
It is important to note that IRAS further states that if the change in a company’s financial year-end results in a period of more than 12 months is covered, the company may have to apportion and attribute the adjusted profit/losses to two different years.
1. What makes the FYE of a company very important?
The date you’ve chosen for your company’s financial year-end (FYE) will also determine the dates for other essential regulatory compliance requirements, such as filing of Estimated Chargeable Income (ECI), annual returns, holding of Annual General Meeting (AGM), and basis period for assessing corporate tax.
2. Do I have to give a reason for the change of FYE?
If you require the Registrar’s approval to get the FYE changed for your company, you would have to provide a reason for the same.
3. Can a company have a non-12-month financial year?
It is not uncommon for a company to have an unusual duration for its financial year, such as 52 weeks rather than the usual 12-month financial year. ACRA must be notified of any changes to a company’s financial year end in advance to avoid the inconvenience of it having to apply for approval each year.
Timcole is one of the leading company incorporation and accounting firm based in Singapore. Our wide range of professional services serves as a one-stop solution for your business, offering you the most affordable price for services conducted with the highest level of excellence.
You can also depend on Timcole for your company bookkeeping and annual tax returns submission. Our tax professionals can assist you with proper tax computation and planning and help devise effective tax strategies.
Contact us to find out more about how we can help you with your company today.