Phasing out the Penny: Member FAQs

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  1. What to do with the penny?
    Does this change affect all transactions?
  2. What will happen when I return my pennies to the bank?
  3. How long will I have to bring in my pennies for deposit?
  4. Do my receipts have to be altered to reflect rounding?
  5. Do I have to return my pennies?

    What happens on February 4th:

  6. What happens on February 4?
  7. Can I still accept pennies after February 4?
  8. Do I have to implement rounding rules on February 4?
  9. Will banks still be issuing pennies after February 4? 

    What to do at the cash register:

  10. When will I no longer be able to get pennies from my bank?
  11. What are the rounding rules?
  12. What are other retailers doing?
  13. How much will these changes cost me? 
  14. Does this change affect credit and debit transactions?
  15. How does this affect the Scanner Code of Practice?
  16. How does this affect Quebec price accuracy regulations?

    More:

  17. How will income tax reporting be affected by rounding (i.e., how to manage the adjustment amount resulting from rounding)?
  18. As a business owner, will I have an increased chance of being audited because of phasing out the penny?
  19. Do changes need to be made to my POS? 
  20. Do I have to change the price of my individual products?
  21. Do the rounding rules apply to US tourists using US currency?
  22. How would this affect retailers’ processes for balancing their daily cash registers? For example, if the actual cash payment received varies from the amount on the receipt, the cash float would not balance.  What are retailers doing about this? How will they manage variances with staff accountability for balancing at the end of the day?   
  23. Similarly how will this affect my year end accounting? What do we think retailers will do to address any discrepancies between the cash balance and the totals in their POS systems?
  24. Will I still be able to get pennies from the bank for my cash register float?)
  25. Do I need to use rounding rules when products are returned? 

    Contact:

  26. Who can I contact at RCC if I need more information?

 

  1. Does this change affect all transactions?

    No. The changes will only affect cash purchases when exact change is not available.
     

  2. What will happen when I return my pennies to the bank?

    Retailers, like all Canadians, may redeem their pennies at their financial institution. Financial institutions may require that pennies be properly rolled.

    The standard practice is that pennies, like other coins such as dimes or nickels, are rolled or wrapped for deposit. Financial institutions and charities have the discretion to decide whether pennies must be rolled or not. Retailers should consult their financial institution to determine whether unrolled pennies will be accepted.

  3. How long will I have to bring in my pennies for deposit?

    No. The changes will only affect cash purchases when exact change is not available.
     

  4. Do my receipts have to be altered to reflect rounding?

    No. According to the Canadian Revenue Agency, receipts do not need to be changed to reflect rounding.

  5. Do I have to return my pennies?

    No. Pennies will remain legal tender.
     

  6. What happens on February 4?

    The Canadian Mint stopped producing pennies in the summer of 2012. On February 4, the Mint will stop circulating pennies to financial institutions and will also be encouraging them to send back any pennies that they have on hand.  Also, as of February 4, the federal government will implement rounding rules for cash transactions that Canadians undertake with federal government agencies.

  7. Can I still accept pennies after February 4?

    Yes. The decision is up to the individual retailer. Pennies will remain legal tender; however, as has always been the case, retailers have the choice as to what form and denomination of currency they accept.

  8. Do I have to implement rounding rules on February 4?

    No, as long as you have supplies of pennies you can continue to make exact change.

  9. Will banks still be issuing pennies after February 4?

    The Royal Canadian Mint will cease the distribution of pennies to financial institutions on February 4, 2013. Most banks are also expected to stop distributing pennies on this date.
     

  10. When will I no longer be able to get pennies from my bank?

    It is anticipated that banks will stop circulating pennies on February 4.
     

  11. What are the rounding rules?

    The federal government will be utilizing the following rounding rules. (Source Finance Canada)

    • Amounts ending in 1 cent and 2 cents are rounded down to the nearest 10 cents.
    • Amounts ending in 3 cents and 4 cents are rounded up to the nearest 5 cents.
    • Amounts ending in 6 cents and 7 cents are rounded down to the nearest 5 cents.
    • Amounts ending in 8 cents and 9 cents are rounded up to the nearest 10 cents.
    • Amounts ending in 0 cent and 5 cents remain unchanged.
    • Example:  A $1.83 coffee and a $2.86 cent sandwich would be $4.92 after a five per cent Goods and Services Tax. Therefore, for cash purchases, after rounding the total is $4.90. For all other means of payment (debit/credit) it is $4.92.
    • (Tax rate of five per cent has been provided for the purposes of illustration. Any taxes -- e.g., the Goods and Services Tax/Harmonized Sales Tax -- as well as any fees or duties, should be tabulated prior to rounding.)
       
  12. What are other retailers doing?

    Other retailers will be following a variety of rounding approaches. Some are expected to round down all transactions, some will use the feds rules and others will be rounding down all sales below five cents and rounding up above five cents.  It is the retailer’s decision as to which method to follow.
     

  13. How much will these changes cost me? 

    There is no necessity to spend any money to address this. Retailers do not have to change their cash registers and can simply have their staff use rounding rules “in their head” as long as they are consistent in the approach.
     

  14. Does this change affect credit and debit transactions?

    No. The changes will only affect cash purchases when exact change is not available.
     

  15. How does this affect the Scanner Code of Practice?

    Rounding will only apply to final purchases. The scanner price code will  not be affected.

  16. How does this affect Quebec price accuracy regulations? 

    The Quebec government will publish a regulation in early February to determine this.

  17.  How will income tax reporting be affected by rounding (i.e., how to manage the adjustment amount resulting from rounding)?

    From an income tax perspective, the amount gained or lost on cash transactions due to rounding will constitute income for a taxation year from a business and would be included in the calculation of the taxpayer's profit from that business for the year. If your books and records are accurate, the phasing out of the penny will not create additional bookkeeping and should not create any measurable impact on business revenues.
     

  18.  As a business owner, will I have an increased chance of being audited because of phasing out the penny?

    The Canada Revenue Agency (CRA) states that phasing out the penny will not increase a business’s risk of being audited. The CRA will continue to use the same risk assessment and management techniques used prior to the penny’s elimination to analyze every tax and GST/HST return filed and to identify those who should be flagged for further CRA intervention.

  19. Do changes need to be made to my POS? 

    No. Most large retailers with many storefronts will be changing their POS equipment.  However, RCC does expect that many independent retailers will simply round “in their heads” at time of transaction.
     

  20. Do I have to change the price of my individual products?

    No, the effect of the penny’s elimination will only be felt at the till, when the final costs (including taxes) of all the goods purchased are tallied.

  21. Do the rounding rules apply to US tourists using US currency? 

    Yes.

  22. How would this affect retailers’ processes for balancing their daily cash registers? For example, if the actual cash payment received varies from the amount on the receipt, the cash float would not balance.  What are retailers doing about this? How will they manage variances with staff accountability for balancing at the end of the day?   

    There may be slight differences at the end of the day but these will not affect reporting requirements to Canadian Revenue Agency.

  23. Similarly how will this affect my year end accounting? What do we think retailers will do to address any discrepancies between the cash balance and the totals in their POS systems?

    Again, there may be slight differences at the end of the day, but these will not affect reporting requirements to Canadian Revenue Agency.

  24. Will I still be able to get pennies from the bank for my cash register float?)

    It is unlikely you will be able to withdraw pennies from the bank, but you should check with your bank. Financial institutions will no longer be receiving pennies from the Royal Canadian Mint after February 4, 2013,   Most financial institutions have indicated that they will not distribute pennies after February 4.
     

  25.  Do I need to use rounding rules when products are returned?

    As pennies disappear from circulation, the original rounding rules that were used for cash transactions will have to be used for returns that were originally paid in cash.
     

  26. Who can I contact at RCC if I need more information?

    You can call our customer service team at 1-888-373-8245 or e-mail info@retailcouncil.org