On May 4, 2012, the Royal Canadian Mint officially ended production of the penny. The mint will continue to circulate the coins up until February 4, 2013, at which time all coins returned to the mint will be removed from circulation. The cent will remain Canada’s smallest unit of currency for the pricing of goods and services, and the penny will retain its currency value indefinitely. However, as the coins are removed from circulation, rounding of cash transactions will be required.

Impacts on Business

Many businesses have questions about how their operations will change once the Canadian Mint begins to remove pennies from circulation in 2013. The following is a list of potential questions and answers.

Is the government planning a cut-off date for the return of all pennies?

The current plan is for the penny to retain its value indefinitely. Businesses will be able to accept them as legal tender and return them at face value to the Canadian Mint through their financial institution.

Should businesses just round out the price of each individual item?

No, the government’s action plan expects businesses to round only the final total after taxes. Since there are an unlimited number of possible item and quantity combinations, as well as sales taxes to be factored, it would be impossible to effectively price all items in a business.

Should businesses set up cash register and invoicing systems to automatically round all transactions?

No, the expectation is that the cent will continue to be the smallest currency increment. Customers are expected to be able to pay the exact transaction amount if the payment is something other than cash.

How will businesses calculate PST/GST/HST going forward?

Businesses will continue to track sales taxes as they always have. Since rounding will only occur after the final after tax total is calculated, the collection of these taxes will not change.

How is my business expected to round transactions?

The government expects that businesses will round prices in a fair, consistent and transparent manner. Most analysts expect that final totals ending in 1, 2, 6 and 7 cents will be rounded down, while totals that end in 3, 4, 8 and 9 cents will be rounded up.

For a detailed discussion on how to prepare for the elimination of the penny in your business, contact your Millards advisor at (519) 759-3511 or at www.millards.com.

Bill Butler
Millards