Monday, 4 February 2013

how does the elimination of the penny affect your photography business



The 2012 federal budget states: "The government expects that businesses will apply rounding for cash transactions in a fair and transparent manner."

The rounding will not be done on single items but on the total bill of sale. If the price ends in a one, two, six, or seven it gets rounded down to 0 or 5; and rounded up if it ends in three, four, eight or nine.

Rounding
Amounts ending in 1 cent and 2 cents are rounded down to the nearest 10 cents.
Amounts ending in 3 cents and 4 cents are rounded up to the nearest 5 cents.
Amounts ending in 6 cents and 7 cents are rounded down to the nearest 5 cents.
Amounts ending in 8 cents and 9 cents are rounded up to the nearest 10 cents.
Amounts ending in 0 cent and 5 cents remain unchanged.

Example

A 1 dollar and 83 cent coffee and a 2 dollar and 86 cent sandwich would be 4 dollars and 92 cents after the 5 percent Goods and Services Tax.

A tax rate of 5 per cent has been provided for the purposes of illustration. Any taxes (e.g., the Goods and Services Tax/Harmonized Sales Tax), as well as any fees or duties, should be tabulated prior to rounding.

If the customer chooses to pay by cheque, credit card or debit card, no rounding is applied and the final payment is 4 dollars and 92 cents. However, if the customer pays with cash, the final total is rounded down 2 cents to a final payment of 4 dollars and 90 cents.

Businesses will not need to adjust their cash registers.

What about the sales tax and the GST/HST?

They won't make a difference. The government wants the rounding done on cash transactions only after the taxes have been added to the sub-total.
 
Here is a graphic to better explain