Thursday, December 20, 2012

GST/HST Implications of the Loss of The Penny



Beginning February 4, 2013 the Canadian Mint will stop distributing pennies. Vendors who accept payment in cash will be forced to round transactions to five cent increments in order to allow for exact payment to be made without the use of the penny. While this change will make all of our wallets a little lighter, it will have some interesting implications.
The government has released rounding guidelines that indicate allowable rounding procedures for the Canadian government to perform for transactions with the public. Most likely, businesses will follow this method too.
For transactions that would result in .01 or .02 cents, the total amount will be rounded down to .00. Amounts due ending in .06 or .07 cents will be rounded down to the .05. For amounts ending in .03 or .04, the total will be rounded up to .05. And for transactions resulting in .08 or .09 the balance will be increased to .10.
An example of this would be a payment due for $23.43. The revised total would be $23.45. And for a payment due of $23.41, the total will be reduced to $23.40.
Payments made by cheque, wire or credit card will still allow other cent increments to be included because there is no cash element in the exchange.
It will be interesting to see how this change will play out in businesses that except multiple forms of payment. For instance, if a man makes a purchase at the convenience store that results in $58.77, the vendor will need to find out the method of payment before accepting it because if the customer pays on credit card, it is acceptable, but if the customer pays in cash then the total will be rounded down to $58.75.
This may prove to become a hassle for shoppers when the individual in front of them in line wants to pay cash, then does not have enough and so the cashier must change the total balance owing in order for the client to make the payment by credit card.
It is possible that store owners will alter the pricing of their goods so that the final price including GST/HST will be an amount ending in .00 or .05 for all goods and/or services.
Businesses will need to be proactive and very shortly address how they will adapt their pricing to accommodate this change.
So as we say goodbye to 2012, it is also time to say goodbye to the once-loved penny.

3 comments:

  1. It will be interesting to see how this change will play out in businesses that except multiple forms of payment. For instance, if a man makes a purchase at the convenience store that results in $58.77. Especialistas Contadores Publicos

    ReplyDelete
  2. California estimated tax payments Thanks for taking the time to discuss this, I feel strongly about it and love learning more on this topic. If possible, as you gain expertise, would you mind updating your blog with extra information? It is extremely helpful for me.

    ReplyDelete
  3. Nashville tax service I have read all the comments and suggestions posted by the visitors for this article are very fine,We will wait for your next article so only.Thanks!

    ReplyDelete