ONTARIO - As of last week, 104 years of the Canadian penny officially came to an end.
In Economic Action Plan 2012, the government of Canada has announced that it will modernize Canada's currency set by eliminating the penny from circulation. While the coins will remain legal tender, the Royal Canadian Mint will no longer distribute pennies as of this fall (2012).
"The Mint will continue to develop new strategies and technologies to meet current national and world market demands," said Ian E. Bennett, president and CEO of the Royal Canadian Mint. "The Mint's Winnipeg facility has produced coins for over 75 countries in the past 35 years; therefore we have a solid reputation on which to build a future without the penny."
Due to rising labor, metal and other manufacturing and distribution costs, each penny now costs more than 1.6 cents to produce. As a result of the Mint's patented, cost-effective multiply plated steel technology, all other Canadian circulation coins cost well under face value to produce.
Canadians can redeem their pennies at their financial institutions or consider donating them to charities.
The Royal Canadian Mint will stop distributing penny coins to financial institutions later this year. As the coin begins to disappear, prices for cash transactions will be rounded up or down to the closest 5 cents. Non-cash payments such as checks, credit and debit cards will continue to be settled to the cent.
The Canadian government says that businesses do not need to update cash registers for rounding, since prices and the final total payment will still be set at one-cent increments. GST/HST will be calculated on the pre-tax price, and not the rounded price. When customers do not have exact change, it is only the final total for cash payments that must be rounded. Consumers can continue to use pennies for cash transactions indefinitely and businesses are encouraged to continue to accept the coin as a means of payment. Rounding guidelines will be adopted by all federal government entities for cash transactions with the Canadian public.
More than a dozen countries including Israel, Switzerland and Brazil, have successfully eliminated single-unit coins. In the U.S., some members of Congress have called for the end of the penny but legislation that would eliminate the need for the U.S. Mint to continue producing it has been unsuccessful.