As the penny drops: What it means for your business
The Royal Canadian Mint is no longer producing pennies and will soon stop distributing them. The last one was minted in May. How will your business be affected by the gradual withdrawal of the humble penny?
One of this year's budget decisions was the elimination of the penny. The cent will remain the smallest unit for pricing goods and services, but its distribution will stop next year. Although the remaining pennies can be used indefinitely, they will be withdrawn gradually from circulation, thereby creating the need to round final prices up or down.
If you accept cash payments for transactions at your place of business, you will be affected by minor changes to the way you deal with the total prices, after taxes.
There won't be any changes to:
- Your cash register
- The prices of individual items
- The taxes (GST/HST)
- The total price if your customer uses credit or debit cards
There will be changes to:
- The total price only, if your customer uses cash
- Totals will be rounded up or down to the nearest five-cent increment
Rounding guidelines for amounts ending in:
- 1 cent and 2 cents — round down to the nearest 10 cents
- 3 cents and 4 cents — round up to the nearest 5 cents
- 6 cents and 7 cents — round down to the nearest 5 cents
- 8 cents and 9 cents — round up to the nearest 10 cents
- 0 cents and 5 cents — no change
For example, if your customer pays with cash and the total price is:
- $1.01 or $1.02, round down to $1.00
- $1.03 or $1.04, round up to $1.05
- $1.06 or $1.07, round down to $1.05
- $1.08 or $1.09, round up to $1.10
Your customers can still use pennies for as long as they have them. Eventually businesses will be asked to return pennies to financial institutions. You may decide to take yours to the bank as your collection builds. These will then go on to the Royal Canadian Mint to be melted down and recycled.
For more payment options for your business, see our previous blog post.