Effective February 4, 2013, the Canadian government proceeded
with its plan to phase out the penny. In light of rising production
and handling costs relative to the coin's face value, the Royal
Canadian Mint has now ceased production of the penny, and
businesses, including retailers, are being encouraged to stop using
pennies in their cash transactions. Cheque, payment by gift cards
and pre-paid credits cards and electronic transfers of funds are
While the penny is still legal tender – retailers are
still permitted to accept and distribute pennies as a method of
payment in their cash transactions, if they choose to do so –
the government has asked that retailers begin rounding the final
amount in cash transactions in a fair, consistent and transparent
Although retailers are permitted to adopt their own rounding
guidelines, the federal government and its agencies have now
adopted a symmetrical rounding process for all cash transactions
with the public. The guideline provides for rounding as
amounts ending in ¢1 and ¢2 are rounded down to the
amounts ending in ¢3 and ¢4 are rounded up to the
amounts ending in ¢6 and ¢7 are rounded down to the
amounts ending in ¢8 and ¢9 are rounded up to the
nearest ¢10; and
amounts ending in ¢0 and ¢5 remain unchanged.
As the obligation with respect to rounding is to do so in a
fair, consistent and transparent manner, retailers may adopt a
rounding process of their choosing, provided that they apply it
consistently. For example, some retailers may decide to round down
all transactions, others might round down final amounts below five
cents and round up final amounts above five cents and others still
might choose to adopt the federal guidelines. The method adopted,
however, ultimately remains the choice of the retailer.
Why Adopt the Rounding Process?
Individuals and retailers alike are being encouraged to deposit
pennies at their financial institutions. As the Royal Canadian Mint
is no longer producing pennies, and financial institutions may
choose not to distribute them to customers, the supply of pennies
may soon dwindle. Retailers may therefore choose to adopt their own
rounding methods in order to exercise greater control over how the
phasing out process impacts their day-to-day activities.
When to Round:
The rounding process applies to final amounts in cash
transactions only, meaning that retailers should continue to tally
the exact amount of individual items (including duties, fees or
taxes) prior to rounding on the final cost. Similarly, refunds in
cash amounts can also have the rounding process applied to them;
this approach will become increasingly necessary as the supply of
Steps to Consider:
In an effort to be fair, consistent and transparent, retailers
who adopt a rounding method may wish to inform the public of their
policies. The government has prepared a bilingual information
document that retailers may choose to post in a conspicuous
location, such as at a point of sale. A copy of the information
notice is available at the following address: http://www.fin.gc.ca/1cent/B-Notice-Avis-e.pdf.
This may also assist frontline staff who engage with the public and
who may be asked about the phasing out process.
While a number of large retailers have indicated that they will
be updating their cash registers and point-of-sale equipment,
others have indicated that staff will be trained in the phasing out
policies adopted and will simply do the "mental math" to
carry out such processes on their own. We would be pleased to
assist you in determining the best approach for your business.
In addition to the foregoing informational overview, we will
continue to monitor developments and provide comment on their
impact on Canadian retailers. We would be pleased to discuss and
provide additional guidance regarding the phasing out of the penny
and its impact on your business.
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