Effect on Businesses of Elimination of the Penny

The Ministry of Finance has stated that businesses are not required by the government to reprogram their cash registers, but they may choose to update their cash registers to automatically calculate rounding for cash transactions and to provide greater transparency and clarity to their customers by showing the rounding on receipts.

Although we’re not familiar with how point-of-sale (POS) cash register equipment works in detail, it seems logical that if the amount paid differs from the amount of the total sale, there could be problems.  The Canadian Restaurant and Foodservices Association (CRFA) made a submission to the Ministry of Finance on this topic in June 2012.  They are recommending that all transactions, not just cash transactions, be rounded to the nearest five-cent increment.  This is because it will be more complicated to reprogram POS equipment for only cash transactions.  As far as we can see, as of December 20, 2012, there have been no further announcements by the Ministry of Finance to indicate any change.

GST/HST remittances and input tax credits will not be affected by rounding of cash transactions.  The net amount gained or lost due to rounding of cash transactions will increase or reduce the net income of the business.  Theoretically, the net effect should be zero.

For more information visit the Tax Tips website