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As June 30 looms, we all seem to acknowledge it as a turning point of some kind. The End Of Financial Year, EOFY, whatever you call it has a reason for being both on the date it is in our country and for being there at all.
While much of the rest of the world wraps up their financial affairs on December 31st (see the exceptions below), Australians go through the annual fiscal wrap-up on June 30th (as you’re no doubt well aware …). This curious practice has its roots in Australia's history and the peculiarities of its parliamentary system.
To understand the origins of Australia's financial year, we must delve into the nation's federation. In 1901, the Commonwealth of Australia was formed through the Federation of six separate colonies, which eventually became the states and territories of Australia as we know them today. It is worth noting that Australia's federation was achieved by an Act of the BritishParliament, as each colony was under British rule at the time. This Act also included the Australian Constitution, which interestingly left the door open for New Zealand to join the Commonwealth of Australia. However, New Zealand declined the offer, cementing its status as a separate nation (but for now at least, we’ll leave that alone alongside other un-friendly repercussions of this whole process).
Before Federation, each colony had its own parliament, and these parliaments were responsible for overseeing the treasury offices.However, parliamentarians were reluctant to work during the summer andChristmas period, which coincided with the end of the calendar year. Since most of them were on holiday during that time, the treasury offices had no reason to present their reports to Parliament on December 31st. Instead, they chose a time when they knew Parliament would be in session – right in the middle of the calendar year when the weather was cold and the days were short.
Because the colonies were accustomed to reporting on June30th, the Commonwealth of Australia adopted this practice when it was formed.
Interestingly, Australia is not the only country with a different financial year. The United States, for instance, concludes its financial year on September 30th. However, this date would be impractical forAustralia due to potential conflicts with various football grand finals(thankfully for we as accountants). In the United Kingdom, the financial year ends in April, likely to ensure that parliamentary work is completed before the summer holidays. Most continental European countries use the calendar year as their financial year. Meanwhile, Canada takes a dual approach, with the government's financial year ending on March 31st while individual tax payers adhere to the calendar year.
Even New Zealand has a different financial year for the government (matching Australia's) and individual taxpayers, who wrap up their financial affairs on March 31st.
So there you have it! Australia's financial year ending onJune 30th is a product of the country's history and the desire to align with parliamentary schedules… aren’t those pollies lucky? So, the next time you find yourself crunching numbers in preparation for the end of the financial year inAustralia, remember that it's not just a matter of dates but a reflection of the nation's unique historical circumstances.
History aside, if you’re looking for help preparing for our unique EOFY, the Attune team are perfectly equipped to help you navigate your obligations with our complete tax advisory and accounting services. Give the team a call on 1300 866 113 or send us an email to start the conversation.
