Canadian Retailer - November/December 2012 - (Page 22)

RETAIL: AT ISSUE CURRENCY CHANGE As February 4, 2013 approaches – the date that’s been determined as the start date for the phase out of the penny from Canadian circulation - there are more than a few things for Canadian retailers to consider. Reason for elimination: In Economic Action Plan 2012, the Government announced it will eliminate the penny from Canada's coinage system due to its excessive and rising cost of production relative to face value. Estimated savings for taxpayers: $11 million a year. WHAT RETAILERS NEED TO KNOW Are businesses required to accept pennies after February 4, 2013? ROUNDING GUIDELINES Once there are no longer pennies in circulation, any payment made in cash will need to be rounded by retailers, either up or down, to the nearest five cent increment. Under this guideline, when pennies are not available, cash transactions will be rounded in a fair and transparent manner, as illustrated below: ROUND UP $1.03 or $1.04 = $1.05 $1.08 or $1.09 = $1.10 Businesses do not have a legal obligation to accept any particular Canadian coins or bank notes in a retail transaction. The penny will continue to be legal tender and businesses may accept the coin if they so choose. Are businesses obligated to follow the symmetrical rounding guideline proposed by the Government of Canada? Businesses are expected to round the final amount of any cash payment in a fair, consistent, and transparent manner. Should businesses round the prices of individual items? Only the final amount in a cash transaction (or equivalently, the change owed) is subject to rounding. Individual items, as well as any duties, fees or taxes, should be tabulated in their exact amount prior to rounding. How will accepting foreign currencies, government cheques, gift cards, split payments be affected by rounding? Cheques, and other transactions using electronic payments – debit, credit and payments cards – do not need to be rounded, because they can be settled electronically to the exact amount. They should be calculated in the same manner as before. When a consumer requests a refund, is the amount subject to rounding? Example of Rounding ROUND DOWN $1.03 or $1.04 = $1.05 $1.08 or $1.09 = $1.10 Businesses set their own policies regarding refunds. However, if a refund is paid out in cash and pennies are not used, businesses will be expected to round the final amount in a fair and transparent manner. Will businesses need to update cash registers for rounding? TOTAL AMOUNT = $7.92 Rounding for cash payments occurs after the tabulation of the cost of purchase. As such, there is no need to update cash registers. However, businesses may choose to update their registers to automatically calculate rounding for cash transactions and to provide greater transparency and clarity to their customers by showing the rounding on receipts. Will businesses be able to redeem pennies with their financial institutions? PAYMENT OPTIONS: 20 20 Cheque or Credit/Debit Card No Rounding/ No Change Final payment $7.92 Cash Round Down Final payment of $7.90 The Government expects that financial institutions will facilitate the process of penny redemption by accepting pennies from businesses beyond the February 4, 2013 transition date. For more information about the elimination of the penny, businesses should consult the Canada Revenue Agency (CRA) website at www.cra-arc.gc.ca/ menu-eng.html. 22 | canadian retailer | holiday 2012 | www.retailcouncil.org/cdnretailer http://www.cra-arc.gc.ca/menu-eng.html http://www.retailcouncil.org/cdnretailer

Table of Contents for the Digital Edition of Canadian Retailer - November/December 2012

PUBLISHER’S DESK
SHOP TALK
FIGHTING FOR RETAILERS; ENSURING THE STRENGTH OF THE INDUSTRY
DIGITAL COMMERCE “GAME CHANGERS” & INNOVATORS
LES MANN: BUILDING A LASTING GROCERY LEGACY
CURRENCY CHANGE
RETAILER’S GUIDE
RETAIL WEST: KNOWING YOUR CUSTOMER AND GROWING YOUR BUSINESS
CREATING THE FUTURE TO PROTECT IT
RETAIL’S 2012 GAME CHANGERS
ADVERTISERS’ INDEX
RETAIL BY THE NUMBERS

Canadian Retailer - November/December 2012

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