INTRODUCTION


In Economic Action Plan 2012, the Government announced it would
phase out the penny from Canada’s coinage system. The decision to phase out the
penny was due to its excessive and 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.

The cent will remain Canada’s smallest unit for pricing goods and services. This
will have no impact on payments made by cheque or electronic transactions—only
cash transactions will be affected. Moreover, pennies can still be used in cash
transactions indefinitely with businesses that choose to accept
them.



ROUNDING GUIDELINES


As pennies exit circulation, cash payments or transactions only
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.

WHEN TO ROUND


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.

Additional Information

The Ministry of Finance has provided answers to some frequently
asked questions at the following links.