What's up with the penny?
The government announced in the budget that it is eliminating the penny from Canada's coinage system. In about six months the Royal Canadian Mint will stop distributing Canadian coppers.
What's going to happen to the pennies that are in circulation?
Starting in the fall, businesses will be asked to return pennies to financial institutions. The coins will be melted and the metal content recycled.
In the meantime, Canadians can continue to use pennies to pay for things and the one-cent piece will retain its value indefinitely.
How long will it take?
"There is no end date to this process," Alex Reeves of the Royal Canadian Mint told CBC News.
I want to empty my penny jar. How many pennies can be used for a purchase?
The Currency Act states: "A payment in coins … is a legal tender for no more than … 25 cents if the denomination is one cent."
How will we pay for things in amounts not ending in a zero or a five?
Coins abandoned around the world
Other countries have stopped using their low-value coins. Some examples:
- Australia removed its one-cent and two-cent coins from circulation in 1992.
- Brazil discontinued the production of one-centavo coins in 2005.
- Finland has not issued one-cent or two-cent euro coins since the euro was introduced in 2002.
- Israel stopped issuing the one-agora coin in 1991 and the five-agorot coin in 2008.
- Netherlands stopped issuing one-cent and two-cent euro coins in 2004.
- New Zealand removed its one-cent and two-cent coins from circulation in 1989 and its five-cent coin in 2006.
- Norway removed its one-ore and two-ore coins in 1972; by 1991, it had also removed its five-, 10- and 25-ore coins.
- Sweden removed its one-ore and two-ore coins in 1971; by 1992, it had also removed its five-, 10- and 25-ore coins. In 2009, it removed the 50-ore coins from circulation.
- Switzerland officially withdrew its one-centime coin from circulation in 2006, while the two-centime coin lost its legal tender status in 1978.
- Britain removed the legal tender status of the half-penny in 1984.
The 2012 federal budget states: "The government expects that businesses will apply rounding for cash transactions in a fair and transparent manner."
The rounding will not be done on single items but on the total bill of sale. If the price ends in a one, two, six, or seven it gets rounded down to 0 or 5; and rounded up if it ends in three, four, eight or nine.
Businesses will not need to adjust their cash registers.
What about the sales tax and the GST/HST?
They won't make a difference. The government wants the rounding done on cash transactions only after the taxes have been added to the sub-total.
What about non-cash sales?
Cheques, credit and debit cards and electronic transactions will continue to be settled to the cent.
What's a penny worth?
The government says it costs 1.6 cents to produce each penny.
Adjusted for inflation, an 1870 penny would be worth about 31 cents today.
Why 1870 and how long have we been using pennies?
The first coins of the Dominion of Canada were issued in 1870, although the penny was not added until 1876. The penny had been in use in what is now Canada since 1858, when the province of Canada adopted the decimal system.
From 1858 to 1907, Canadian coins were struck at mints in England. The first Canadian-produced penny dates from 1908, when the Ottawa branch of the British Royal Mint opened.
Since 1908, the mint has produced 35 billion pennies, half of them in the last 20 years.
How many pennies are in circulation?
According to Alex Reeves, "given the extent of hoarding that has occurred for many years, it is not possible to accurately estimate the number of pennies still in circulation" and the mint does not reveal the number of coins removed from circulation.
So how many pennies are produced in a year?
Use your mouse to hover over the graph. That will reveal the number of pennies minted each year.
Source: Royal Canadian Mint
The total amount of pennies produced in an average year weigh about 7,000 tonnes.
Why does the government want to get rid of the penny?
The government says it costs about $11 million a year to supply pennies to the economy.
With other coins, the government says it "earns more from the sale of coins at face value than it pays to the mint for their production."
Those revenues should increase slightly after penny distribution ends, as demand for other coins should increase.
The minimum cost of keeping the penny in circulation was $150 million in 2006, according to the Desjardins Group. However, the cost that year would have been especially high because it was the peak year for penny production. The $150 million includes costs for government, financial institutions, retailers and consumers.
Will prices go up?
The government claims the inflationary effect of eliminating the penny will be small or non-existent, based on a study by the Bank of Canada in 2005.
Where is the penny produced?
What's a penny made from?
Here's the composition of the one cent coin from 1908 until now:
Source: Royal Canadian Mint
The copper penny was last produced in 1996.
Why do the letters KG appear on the penny below the maple leaf?
Those are the initials for George Edward Kruger Gray the English artist who created the penny's maple leaf twig design in 1937. His design, and his initials, also adorn the Canadian nickel.