Canada Pulls the Plug on the Penny
The Canadian Mint has now ceased distributing pennies to financial institutions and the circulation of the currency will begin to decline. The transition data was announced in July 2012 after consultations with small businesses and retailers. They requested that the transition occur early in the New Year to ensure ample time to prepare. Once fully implemented, taxpayers are estimated to save approximately C$11 million annually.
The penny phase-out will not impact check payments or electronic transactions. Additionally, the penny will retain its value indefinitely and can continue to be used for payment.
Impact on retailers
For cash payments, businesses are expected to round the final amount or change owed in a fair, consistent and transparent manner. The government has elected to round cash payments symmetrically. Final cash amounts ending in 1, 2, 6 and 7 cents will be rounded down, amounts ending in 3, 4, 8 and 9 cents will be rounded up, and amounts ending in 0 and 5 cents will remain the same.
Retailers will likely incur substantial, though not monumental, costs. For small regional retailers, it expected that it will cost them up to $10,000 to make the changes (at POS and in training staff, etc.), and larger retailers much more.
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