Effective February 4th, 2013, the Royal Canadian Mint will no longer distribute pennies. In the March 2012 Federal Budget Finance Minister Jim Flaherty said it cost roughly 1.6 cents to make each penny. This phasing out of the Canadian penny will supposedly save taxpayers $11 million dollars annually.
So how are vendors and consumers supposed to handle the demise of the penny? February 4th is the date businesses will be encouraged to begin rounding transactions. The penny will still be acknowledged in financial transactions if payments are made by cheque, debit, charge cards or electronic transactions. Cash transactions are to be rounded to the nearest five cent increment.
Below is a guideline supplied by the Department of Finance Canada to illustrate how cash transactions will be rounded in a fair and transparent manner.
An overlooked line in the Federal Announcement is “pennies can still be used in cash transaction indefinitely with businesses that choose to accept them”. For more information, please click here.
With the ever increasing costs of bank fees in handling cash and coins this could actually be a savings, once the transition costs of software and possible hardware changes are done.
So what to do with those surplus pennies?
I recently requested to participate in We Create Change.
Every day, women around the world spend a cumulative total of 200 million hours collecting water for their families. 80 percent of illnesses in developing countries are linked to poor water and sanitation. This year, in recognition of the global water crisis and the effect that events like last year’s East African drought have on developing countries, Free the Children has set a goal of providing 100,000 people with clean water for life. Free the Children’s We Create Change campaign, made possible by RBC, is one of Canada’s largest penny drives. Coinciding with the penny going out of circulation, we are challenging Canadians to donate their pennies to an important cause: water. Officially launched in 2012, this campaign shows that pennies can create a lot of change.
Within days I received the bags I had requested along with a letter instructing me on how to get involved. Each bag is to hold $25 worth of pennies, which can then be taken to any RBC branch. The first penny drive ran from November 1st through December 21st 2012. This next drive will begin again in the spring. I look at it as starting my spring cleaning now. And I will also encourage my clients to contribute over the busy tax season.
We don’t always see the positive in the changes the government makes but this penny drive and those hopefully launched by other not for profit organizations could be one of those instances.
I’d love your feedback! And don’t forget to leave a link back to your own blog too if you have one, via the commentluv feature here on the site.
Until next time,