Canada has taken the plunge and announced it will soon phase out the penny from its monetary system. The iconic copper coin’s loss of face value over the past few years has made it less and less viable for the Canadian government to justify continued production – and the Canadian government estimates the move will save taxpayers $11 million a year. Canada will start the phase out in just one month’s time, beginning on February 4, 2013.
One cent units for pricing will not be entirely abolished. The phase out of the pricing ending in odd cents will only apply to cash transactions—credit cards and checks can still be made for small cent units. This may sound confusing, but the Canadian Mint is attempting to assure the public that it is not. With the end of penny production, the Mint projects that the pennies will exit circulation quickly. Businesses may still accept the copper coins, but only if they choose to.
A system of rounding will be put into place, making transactions round up or down to the nearest five cent increments. For example, $1.01 or $1.02 will be rounded down to $1.00, as $1.06 and $1.07 will be rounded to $1.05. To confuse even more, $1.03 or $1.04 would round up to $1.05. But this is all only in cash transactions—this new rounding system should be ignored for debit and credit payments.
If your high school math class paranoia hasn’t been returned yet, the formula becomes more complex. Rounding will take place on the final amount, after taxes, duties or fees.