Year of Assessment

Definition§

The Year of Assessment (YA) refers to the calendar year in which the income for the preceding year is evaluated for tax purposes. In other words, it is the year in which the tax authorities assess the income earned during the “basis year.” The income earned in the basis year is assessed and taxed in the following Year of Assessment.

For example, the income earned in the calendar year 2022 (basis year) will be assessed in the Year of Assessment 2023.

Examples§

1. Example 1: Individual Income Tax

   • John earned $60,000 in 2022. In YA 2023, he will file his income tax return for the income earned in 2022.

2. Example 2: Corporate Tax

   • XYZ Corporation reported a net income of $500,000 for the fiscal year ending December 31, 2022. This income will be assessed for tax purposes in the Year of Assessment 2023.

3. Example 3: Self-Employed Income

   • Maria, a freelancer, made $40,000 in 2022. She will need to report this income to tax authorities in YA 2023.

Frequently Asked Questions§

What is the difference between the Year of Assessment and the fiscal year?§

• The fiscal year is the period for which a company or individual keeps financial records, often spanning 12 months. The Year of Assessment refers to the subsequent year in which the income from the fiscal year is assessed for taxation.

Why is the concept of Year of Assessment important?§

• It determines the tax cycle, filing deadlines, and when taxes are due. Understanding YA helps individuals and businesses better plan and comply with tax regulations.

How is the basis year defined?§

• The basis year is the 12-month period during which the income was earned. For most taxpayers, it is the same as the calendar year, from January 1 to December 31.

Can the Year of Assessment differ from country to country?§

• Yes, different countries can have different tax systems and definitions for their own Year of Assessment.

What happens if there are changes in income in the basis year after the YA has started?§

• Adjustments may need to be filed, and additional taxes or refunds may be due depending on the change in reported income.

Related Terms§

• Fiscal Year: A 12-month period used for accounting purposes, which may or may not coincide with the calendar year.
• Basis Year: The year in which the income was earned, directly preceding the Year of Assessment.
• Tax Return: A form or set of forms filed with a tax authority that declares income, expenses, and other pertinent tax information.
• Income Tax: A tax levied by the government on individuals and businesses based on their income.

Online References§

1. IRS - Tax Year Overview
2. Singapore IRAS - Year of Assessment
3. Canada Revenue Agency (CRA) - Understanding Assessment

Suggested Books for Further Studies§

• “Taxation for Professionals” by David Cairns
• “Essentials of Federal Income Taxation for Individuals and Business (2022)” by Linda M. Johnson
• “Introduction to Taxation: A Business Perspective” by Ana M. Cruz

Accounting Basics: “Year of Assessment” Fundamentals Quiz§

Thank you for delving into the intricacies of the Year of Assessment and challenging yourself with our specialized quiz questions. Keep enhancing your financial acumen!