In Economic Action Plan 2012, the Government announced it would phase out the penny from Canada's coinage system. To help consumers, businesses, charities and financial institutions to plan, a transition date of February 4, 2013 has been set after which the Royal Canadian Mint will no longer distribute pennies.
On this date, businesses will be encouraged to begin rounding cash transactions.
For information about how GST/HST on your retail purchases will be impacted, see Phasing out the penny: tax implications for consumers.
Rounding should only be used on the total amount charged after the calculation of any applicable duties or taxes such as the Goods and Services Tax (GST)/Harmonized Sales Tax (HST). For more information see Phasing out the penny: tax implications for businesses.
For more information about charities and the phasing out the penny, go to Finance Canada’s Web site.
As pennies exit circulation, only cash payments will need to be rounded, either up or down, to the nearest five-cent increment.
The Government of Canada will be adopting a rounding guideline that has been used successfully by other countries for its cash transactions with the public.
Under this guideline, when pennies are not available, cash transactions will be rounded in a fair and transparent manner, as illustrated below:
Again, only cash transactions require rounding. Cheques and transactions using electronic payments—debit, credit and payments cards—do not need to be rounded, because they can be settled electronically to the exact amount.
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, as illustrated:
A 1 dollar and 83 cent coffee and a 2 dollar and 86 cent sandwich would cost 4 dollars and 92 cents after the 5 percent Goods and Services Tax. If the customer chooses to pay by cheque, credit card or debit card, no rounding is applied and the final payment is 4 dollars and 92 cents. However, if the customer pays with cash, the final total is rounded down 2 cents to a final payment of 4 dollars and 90 cents.
*A tax rate of 5 per cent has been provided for the purposes of illustration. Any taxes (e.g., the Goods and Services Tax/Harmonized Sales Tax), as well as any fees or duties, should be tabulated prior to rounding.
For general information for consumers, businesses and charities on the phasing out the penny go to Finance Canada's Web site.