Finance minister Jim Flaherty said Monday that the Royal Canadian Mint will officially no longer circulate pennies as of Feb. 4, 2013.
The federal government announced its plan to eliminate the penny in the 2012 budget. It estimates savings for taxpayers from eliminating the penny is $11 million a year.
When pennies are not available, cash transactions should be rounded to the nearest five-cent increment in a fair and transparent manner, the government says.
Electronic transactions, such as those with debit and credit cards, as well as cheques, will not need to be rounded.
The government said it would adopt a rounding guideline for its cash transactions with the Canadian public.
“Setting a clear transition date will allow consumers, businesses, charities and financial institutions to plan accordingly in the lead-up to February,” said Flaherty.
The penny will retain its value indefinitely and can continue to be used in payments.