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Elimination of the Penny in Canada

Effective February 4, 2013, circulation of the penny coin by the Royal Canadian Mint ceases. This affects only cash transactions. The cent will remain Canada's smallest unit for pricing goods and services. Non-cash or electronic payments such as cheques, credit and debit cards and gift cards will continue to be settled to the cent.

Guidelines published by the Department of Finance include the following:

	Businesses may accept the coin as a means of payment *if they so choose*.
	Businesses are allowed to make change in pennies *if they wish*.
	Pennies can continue to be redeemed at financial institutions. Financial institutions may require that pennies be rolled.

Price Rounding on Cash Transactions

When pennies are not available, cash transactions should be rounded to the nearest five-cent increment in a fair and transparent manner. Rounding should only be used on the final bill of sale after the calculation of GST/HST, where applicable.

Example of rounding for cash transactions:

Total Bill of Sale Amount Including Taxes, Fees, etc.	Rounding	Cash Payment
$1.01 or $1.02	Round down	$1.00
$1.03 or $1.04	Round up	$1.05
$1.06 or $1.07	Round down	$1.05
$1.08 or $1.09	Round up	$1.10

Effect on Businesses of Elimination of the Penny

The Ministry of Finance has stated that businesses are not required by the government to reprogram their cash registers, but they may choose to update their cash registers to automatically calculate rounding for cash transactions and to provide greater transparency and clarity to their customers by showing the rounding on receipts.

Although we're not familiar with how point-of-sale (POS) cash register equipment works in detail, it seems logical that if the amount paid differs from the amount of the total sale, there could be problems. The Canadian Restaurant and Foodservices Association (CRFA) made a submission to the Ministry of Finance on this topic in June 2012. They were recommending that all transactions, not just cash transactions, be rounded to the nearest five-cent increment. This was because it would be more complicated to reprogram POS equipment for only cash transactions. No changes were made in this regard.

GST/HST remittances and input tax credits are not affected by rounding of cash transactions. The net amount gained or lost due to rounding of cash transactions increases or reduces the net income of the business. Theoretically, the net effect should be zero.

Other Resources:

Phasing Out The Penny: Tax Implications for Businesses - Canada Revenue Agency

Eliminating the Penny on the Budget 2012 website.

Frequently Asked Questions - Businesses

Frequently Asked Questions - Consumers

Backgrounder, includes examples of rounding

Revised: October 26, 2023