The mismatch, stated plainly
A person's personal tax year is always the calendar year, January to December. A corporation chooses its own fiscal year-end when it's first incorporated, and that date can fall anywhere — June 30, September 30, March 31 — and stays fixed year to year unless the corporation formally requests a change.
Why it exists this way
A new corporation's first tax year can run up to 53 weeks from its date of incorporation, and most businesses simply pick a year-end that suits their own operating cycle — a seasonal business often ends its year right after its busiest season — rather than defaulting to December by habit.
Why this matters for how current a statement really is
A corporation with a March 31 year-end, preparing a mortgage file in November, is working from financial statements that are already more than seven months stale — the most recently completed fiscal year ended eight months earlier, and the current fiscal year is already more than half over with no filed T2 yet to show for it. Compare that to a December year-end corporation in that same November: barely any lag at all.
What to ask for when the gap is large
Interim, unaudited financial statements covering the stub period since the last fiscal year-end close that gap, so the underwriter isn't working from numbers that could be more than a year out of date by the time the mortgage actually funds.
Changing a year-end
A corporation can request to change its fiscal year-end, but generally needs CRA's approval to do so outside a short list of specific situations — dissolution, emigration, or an acquisition of control under subsection 249(4) of the Income Tax Act, among others. A recent, unexplained year-end change on a file is worth asking about, since a business rarely changes it without a documented reason behind the request.
