Why the Canadian government is phasing out the penny and what it means for you.
February 4, 2013, marked the first day of ceased distribution for the Canadian penny, a coin that has been in circulation since 1858. In July 2012, Finance Minister Jim Flaherty announced that the penny would be phased out due to its excessive production costs relative to its value. A single penny costs 1.6 cents to produce.
The savings from phasing out the penny are estimated at $11 million per year for Canadian taxpayers—not an insignificant chunk of change. Mint spokesperson Christine Aquino told the Vancouver Province that it will take an estimated three to four years to get pennies out of circulation.
In the government’s 2012 announcement, it added that the estimated economic costs of maintaining the penny—including direct production costs and indirect costs to financial institutions, retailers and consumers—amounted to $150 million in 2006.
Despite being eliminated from circulation, the penny will retain its value indefinitely. Consumers can take pennies into their financial institution and use up their remaining pennies at businesses that choose to accept them.
Credit, debit and cheque transactions will continue to be charged in one-cent increments. Only totals for cash transactions will be rounded to the nearest penny.
$1.01 and $1.02 = $1.00
$1.06 and $1.07 = $1.05
$1.03 and $1.04 = $1.05
$1.08 and $1.09 = $1.10
Image: Government of Canada
Kristen Hilderman is the assistant editor at BCBusiness magazine, specializing in retail and manufacturing. | Twitter