Why is the penny being phased out?
The Government is phasing out the penny due to its rising cost of production relative to face value, the increased accumulation of pennies by Canadians in their households, environmental considerations, and the significant handling costs the penny imposes on retailers, financial institutions and the economy in general.
The estimated savings for taxpayers from phasing out the penny is $11 million a year.
When will the Government stop distributing the penny?
The Royal Canadian Mint will cease distribution of pennies to financial institutions on February 4, 2013. On this date, businesses will be encouraged to stop using pennies and begin rounding cash transactions in a fair and transparent manner. As financial institutions will no longer be receiving pennies from the Mint, they may not distribute pennies to consumers and businesses after February 4, 2013.
When will the supply of pennies run out?
The Government expects the existing supply of pennies available for circulation to be sufficient to supply cash transactions through to February 4, 2013.
Are businesses required to accept pennies after February 4, 2013?
While businesses do not have a legal obligation to accept any particular Canadian coins or bank notes in a retail transaction, the penny will continue to be legal tender like all other Canadian coins, and businesses may accept the coin as a means of payment if they so choose.
After February 4, 2013, are businesses allowed to make change in pennies if they wish?
This is an individual business decision.
Are businesses obligated to follow the symmetrical rounding guideline proposed by the Government of Canada?
Businesses are expected to round the final amount (or equivalently, the change owed) of any cash payment in a fair, consistent and transparent manner.
Symmetrical rounding will be adopted by all federal government entities for cash transactions with the public.
Experience in other countries that have phased out low-denomination coins, such as Australia and New Zealand, has shown that fair rounding practices have been respected.
Should businesses round the prices of individual items?
No. Only the final amount in a cash transaction (or equivalently, the change owed) should be subject to rounding. Individual items, as well as any duties, fees or taxes, should be tabulated in their exact amount prior to rounding. This includes the Goods and Services Tax/Harmonized Sales Tax (GST/HST).
How will accepting foreign currencies, government cheques, gift cards and split payments be affected by rounding?
Payments made using non-cash methods such as cheques and electronic payments—debit, credit and other payments cards such as gift cards and prepaid credit cards—do not need to be rounded, because they can be settled electronically to the exact amount.
They should be calculated in the same manner as before. For any cash payment, only the final amount (or equivalently, the change owed) should be subject to rounding. Individual items, as well as any duties, fees or taxes, should be tabulated in their exact amount prior to rounding.
In all cases, businesses are expected to round final totals in a fair, consistent and transparent manner.
When a consumer requests a refund, is the amount subject to rounding?
As is the case now, businesses can set their own policies regarding refunds. However, if a refund is paid out in cash and pennies are not used, businesses will be expected to round the final amount in a fair and transparent manner.
Will businesses need to update cash registers for rounding?
This is an individual business decision.
Rounding for cash payments occurs after any tabulation of duties, fees or taxes. Businesses may choose to update their cash registers to automatically calculate rounding for cash transactions and to provide greater transparency and clarity to their customers by showing the rounding on receipts.
How will the GST/HST be calculated without a penny?
The GST/HST should be calculated in the same manner as before. For any cash payment, only the final amount (or equivalently, the change owed) should be subject to rounding. Individual items, as well as any duties, fees or taxes, should be tabulated in their exact amount prior to rounding.
Again, payments made using non-cash methods such as cheques and electronic payments do not need to be rounded, because they can be settled electronically to the exact amount.
Where can I find more information on the impact of phasing out the penny on GST/HST and income taxes?
Businesses should consult the Canada Revenue Agency website at http://www.cra-arc.gc.ca/gncy/lmntnpnny/bsnss-eng.html
How will rounding resulting from phasing out the penny be affected by provincial law?
Provincial laws, as well as existing federal acts that relate to currency, consumer rights and protections, continue to apply.
Will businesses be able to redeem pennies with their financial institutions?
Businesses can continue to deposit pennies at their financial institutions. Some financial institutions may require large amounts of pennies to be rolled or wrapped for deposit. Businesses should consult their financial institutions in advance to determine how best to make deposits in large volumes.
My question isn't answered here. Who should I ask?
Phasing out the penny is part of Economic Action Plan 2012. For more information on this and other Economic Action Plan measures, call 1-800-O-Canada (1-800-622-6232); TTY: 1-800-926-9105.