Phasing out the penny: tax implications for consumers

How phasing out the penny will affect your purchases

Q1. Whether I pay with cash, a debit card or a credit card, will the GST/HST charged on my invoice change?

A1. No. The GST/HST is calculated on the amount charged for taxable supplies. Rounding only occurs when paying with cash after the tax is added to the invoice.

Q2. Does rounding affect the GST/HST I pay on my purchases if I'm paying for a purchase with part cash and part debit or credit?

A2. No. The GST/HST is calculated on the amount charged for taxable supplies. Rounding only occurs when paying with cash after the tax is added to the invoice.

Q3. What will businesses do with the extra pennies that they gain from rounding?

A3. From an income tax perspective, the amount gained or lost by a business on cash transactions due to rounding will constitute income for a taxation year and would be included in the calculation of the taxpayer's profit from that business for the year pursuant to section 9 of the Income Tax Act.

For general information for consumers on the phasing out the penny go to Finance Canada's Web site.

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