Phase-out of penny officially begins
Yesterday marked the official transition date for the phase-out of the Canadian penny, according to a press release from the Department of Finance.
“Pennies have sat idle for too long in forgotten penny jars and couch crevices,” said Parliamentary Secretary Glover, in a press release released yesterday. “They demand too much time, for too little return, of our small business owners . . . It is time to bid the penny a fond farewell.”
For the past month, the Government of Canada and the Royal Canadian Mint have been reminding consumers, businesses, financial institutions and charities that the supply of pennies will start to diminish after Feb. 4, as the Mint stops distributing the one-cent coins.
The Department of Finance has put together a page on its website to deal with frequently asked questions about the phase-out of the penny. A toolkit was also made available for retailers to use to offer consumers information on how cash payments will be treated when pennies are no longer available, said the press release.
“The Mint has produced this coin for Canada since 1908, and the sun is finally setting on one small part of our currency system which once played a big part in our daily lives,” said Ian E. Bennett, President and CEO of the Royal Canadian Mint.
According to an earlier press release, the “cost-efficient campaign” was created to help ensure Canadians across the country are informed of the Feb. 4 date, said the website.
The penny is being phased out because of the high costs of production relative to the face value of the coin. It costs 1.6 cents to produce the one-cent penny. It is estimated that phasing out the penny will save taxpayers $11 million every year on fully implemented.
The phase-out of the penny has no impact on cheque payments or electronic transactions. The penny will retain its value indefinitely and can continue to be used as cash with businesses that choose to accept them, said the release.
For cash transactions, businesses are being directed to round the final amount, or equivalently, the change owed, “in a fair, consistent and transparent manner,” says the release.
“As a way to put Canada’s remaining pennies to the best possible use, I encourage Canadians to consider giving their pennies to one of the many deserving charities trying to effect real change,” said Parliamentary Secretary Glover.
For its part, the government has elected to round cash payments symmetrically. Under this rounding practice, final cash amounts: ending in 1, 2, 6 and 7 cents will be rounded down. Example: $1.57 will be rounded to $1.55; ending in 3, 4, 8 and 9 cents will be rounded up. Example: $1.53 will be rounded to $1.55; and ending in 0 cents and 5 cents will remain the same, according to the press release.
Canadians can visit the Action Plan website of call 1-800-622-6232 for more information on the phase-out of the penny.
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