Starting tomorrow on February 4, the Canadian Mint will no longer be distributing pennies. The once copper but now mostly steel coins will be taken out of circulation, melted down and the metal recycled. The last one-cent coins which were minted on May 4, 2012, cost 1.6ยข each to make.
After tomorrow, banks will not distribute pennies to their customers but the public can still use the pennies they have. Businesses which accept cash are being asked to change their pricing policy to accommodate our new “penny-less” world.
Although it’s not legally required, businesses are being encouraged to stop using the one-cent coin and to round up or down the final cash purchase price after taxes to the nearest five cents. However, a business may round its prices any way it wants. Of course, if a business rounds only up and by a relatively high amount, it will lose customers. Some businesses have already announced that they will only round down.
Since there’s an estimated six billion pennies in circulation, it’s predicted that it may take about six years for Canadians to become penny-less.
Payment by cheque, credit card, debit card or any electronic method is not affected.
What if a business happens to always round down and loses hundreds or thousands of dollars? What if a business always rounds up and makes hundreds or thousands of dollars more?
The amount of “rounded” money must be recorded and then claimed either as a business loss or a business profit for income tax purposes. Reporting and remitting sales taxes are not affected.
