Money & Shopping in Canada

North AmericaCanadaMoney & Shopping in Canada

Currency in Canada

Canada’s currency is the Canadian dollar (symbol: $; correct abbreviation: CAD), often referred to simply as “dollar”, “buck” (slang) or “loonie” (nickname for the $1 coin, now also a slang term for currency). One dollar ($) is made up of 100 cents (¢). Rising oil prices tend to increase the value of the Canadian dollar relative to its American counterpart. During the Arab-American oil embargo in the 1970s, the Canadian dollar was worth more than the US dollar; it fell to about 66 US cents in the mid-1990s before recovering as oil prices rose after the turn of the millennium. During the US subprime mortgage collapse, the US dollar again fell below its Canadian counterpart. At the end of 2013, the Canadian dollar was trading slightly below the US dollar, as it had been for several years; at the end of 2014, with the fall in crude oil prices, it was trading just above 85 US cents and in 2015 it is below 80 cents. The Canadian dollar is considered one of the most important currencies in the world and is available at banks and currency exchanges around the world.

Canadian coins are 1¢ (penny, discontinued in early 2013 but still accepted as legal tender), 5¢ (nickel), 10¢ (dime), 25¢ (quarter), $1 (loonie) and $2 (toonie). (The penny, nickel, dime and quarter are roughly the same size, shape and colour as their American counterparts, but not in metallic composition. Therefore, they are often accepted equally by people on both sides of the border, but not necessarily by machines.) Canadian notes come in denominations of $5 (blue), $10 (purple), $20 (green), $50 (red) and $100 (brown). The $1,000 note (pink) was discontinued in 2000 as part of the government’s efforts to more closely monitor the transfer of large sums of money. Although it is still legal tender, banks are withdrawing it from circulation. In addition, the 1-dollar (green/black) and 2-dollar (terracotta) notes are no longer in circulation but are still legal tender.

Traditionally, a strong US dollar meant that goods in Canada had a higher dollar price than south of the border. When the Canadian dollar was high (e.g. when oil prices rose or when the US economy hit a major hurdle, such as the 1970s oil embargo or the 2008 housing market collapse), Canadians living near the border flocked to the US to make large purchases at lower costs. This enthusiasm, already dampened by the restrictive and arbitrary post-9/11 border controls in the US, evaporated just as quickly when the exchange rate returned to a point where the real cost of goods was finally similar.

In Canada, fuel (gasoline, diesel) is sold in litres, as opposed to gallons. Canadian fuel taxes are high by US standards, a problem compounded by double-digit sales taxes in many provinces.

Tipping in Canada

Tipping in Canada is similar to the United States due to the cultural proximity of the two countries, but tends to be slightly lower due to the higher minimum wage and publicly funded medical care. Restaurateurs in Canada typically receive 10-15% of the total before tax. Tipping is not appropriate in cafeterias, fast food places and takeaways; hotel maids do not expect tips. When you add double-digit Canadian VAT and a generous tip to the cost of a restaurant meal, the bill can often exceed the menu price by 25% or more.

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While tipping was originally a way to reward above-average service, today we see an attitude of entitlement in most restaurants, bars, hotel rooms, hair salons and taxi companies. Don’t be surprised if the local pizzeria that advertises “free delivery” sends someone who, as soon as he arrives at your doorstep, holds out his hand for a tip or wants to keep the change.

Some provinces (including Quebec and Ontario) allow employers to pay a lower minimum wage to workers who can reasonably be expected to receive tips. Employers routinely abuse this privilege by distributing all tip income among large groups of workers, each of whom then receives a low wage in the hope that the customer will somehow make up the difference. The restaurant does not tell the customer that the individual operator is not allowed to keep the entire tip. Large groups and customers paying by credit card should be especially careful, as it is not uncommon for a bar or restaurant to add a generous 15% tip on top of the actual bill – sometimes even in buffet-style establishments where customers are expected to help themselves.

There are also tax considerations; if the restaurant were to admit that the extra 15% is part of the base price, those dollars would be subject to Canada’s infamous double-digit sales taxes. Governments also tend to make blanket assumptions about tips for income tax purposes (in Ontario, if you charge a large tip on a credit card, the tax office assumes the server’s cash customers were equally generous; in Quebec, the government can blindly assume that servers collect a 15% tip on every transaction – even if the food was served an hour late and was ice cold). This is rather frowned upon by waiters, especially since the unemployment insurance payout when the restaurant closes is based solely on the basic wage (below the minimum wage).

Haggling in Canada

Haggling is extremely rare in normal retail in Canada, and attempts to get a retail clerk to lower prices will do nothing (except test the clerk’s patience). This is rarely a problem as most retailers in Canada price fairly and do not try to extort their customers due to the highly competitive market and prosperous economy. For larger items, especially electronics and high-end vehicles, many employees work on commission, so haggling can occur on these items and sellers may offer you a lower price than what was quoted upfront. Some large retail shops will offer you a discount if you can prove to them that one of their competitors is selling the same product at a lower price. However, in some establishments such as flea markets, antique shops, farmers’ markets, etc. you may be able to negotiate a lower price, although again it is often unnecessary to try too hard.

Currency exchange

In all cities, Canadian dollars can be exchanged for most major currencies at many banks. In addition, some retailers in Canada accept US currency at face value or at a slightly reduced value. All Canadian banks offer currency exchange services at the current rate. In some areas, private currency exchange offices offer better rates and lower fees than banks. If you have time to consult one during your trip, you may be able to save money on currency exchange on arrival and before departure, as Canadian dollars may not be worth as much in your home country, especially the coin.

Private companies are not required to exchange foreign currency at international rates. Even in the most rural areas, converting between Canadian and US dollars should not be a problem, although travellers expecting to be able to exchange other currencies at a Canadian bank may need to be patient. In fact, most destinations accept US dollars themselves and are likely to offer a very good exchange rate. This is especially true in regions where tourism is the cornerstone of the local economy.

Since Canadian banks cash travellers’ cheques in Canadian dollars free of charge, so do most businesses. This makes traveller’s cheques a safe and convenient way to transport money within Canada.

Many shops in Canada accept US currency based on their own exchange rate for general purchases. Banknotes are taken at the current rate. However, US and Canadian coins are similar in size and are therefore used interchangeably; it is quite common for change to be given in a mixture of Canadian and US coins. Almost all vending machines do not accept US coins.

Credit cards

Credit cards are widely accepted, with Visa and MasterCard accepted in most places, American Express somewhat less frequently and Diners Club only in the more upscale restaurants and hotels. Discover is generally accepted in establishments that cater to Americans, such as hotels and car rental agencies. Generally, you will also get a better exchange rate when using a credit card, as your bank will automatically convert the currency at the current rate.

Electronic banking/purchasing

The banking system is well developed, secure and technologically advanced. ATM usage is very high in Canada. There is a secure and extensive network of automated teller machines (ATMs) where you can withdraw money directly from your home account using your bank card, but the fees incurred may be higher than for credit cards. If possible, try to use the ATMs of licensed banks, as the fees are often lower than those of independent ATMs.

All Canadian banks are members of the national financial transaction network Interac. Most retailers and restaurants/bars allow ABM purchases through Interac, although they do not accept major credit cards. Many Canadians rarely use cash and prefer electronic means of payment.

Other ATM networks are widely (but not universally) supported. In general, institutions that issue Visa cards (RBC, TD, CIBC, BNS, Desjardins) accept PLUS cards, while institutions that issue Mastercard cards (BMO, many credit unions) accept Mastercard cards (Cirrus or Maestro).

Die “großen fünf” Retail-Banken in Kanada sind Royal Bank of Canada (RBC), Toronto-Dominion Bank (TD), Bank of Nova Scotia (Scotiabank), Bank of Montreal (BMO) und Canadian Imperial Bank of Commerce (CIBC).

Taxes in Canada

Be aware that (unlike many other countries where what you see is what you pay and where “hidden costs” are prohibited by law) you will almost always pay more than the prices shown. They usually do not include VAT and a number of very imaginative extras and/or more or less obligatory tips. So don’t have your loonie ready when you go to the checkout at a thrift shop, because the receipt might well show $1.13. The cash price is rounded up to the nearest nickel ($0.05). Now that the penny is out of circulation, you have to pay $1.15 in cash!

Taxes are added to the price displayed at the checkout. Exceptions where the price shown includes all applicable taxes are fuel (the amount you pay is the amount shown at the pump), parking fees, vending machines and medical services such as eye examinations or dental treatment.

A 5% Goods and Services Tax (GST) is levied on most items. In addition to the GST, most provinces impose an additional provincial sales tax (PST) on purchases. Ontario and the four Atlantic provinces (New Brunswick, Newfoundland and Labrador, Nova Scotia, Prince Edward Island) have combined or “harmonised” the PST and GST. In these provinces, consumers are no longer charged two separate taxes on a purchase, but a single tax called the Harmonised Sales Tax (HST). In French-speaking Quebec, the PST is known as the QST (Quebec Sales Tax) and the GST is known as the GST (Goods and Services Tax).

While GST and PST or HST are levied on most goods and services, some items are currently exempt. While this list may vary by province and tax, some common examples are: Basic food (unprepared), prescription drugs, housing accommodation, medical and dental services, education services and some childcare services. The list of items exempt from the GST/HST is usually shorter than the list of items exempt from the PST in provinces with a separate provincial exemption list.

The VAT rates (in 2008) are as follows:

  • Alberta – no PST, only full GST (total 5%)
  • British Columbia – adds a 7% PST and a 5% GST. A politically disastrous attempt to introduce a harmonised sales tax (HST) in 2010 was reversed in 2013.
  • Manitoba – PST increased to 8% in 2013; 5% GST brings total to 13%.
  • New Brunswick – levies 13% on all taxable purchases in the form of Harmonised Sales Tax (HST) (13% in total).
  • Newfoundland and Labrador – adds 13% in the form of harmonised sales tax (HST) to total taxable purchases (13% in total).
  • Northwest Territories – no PST, full GST only (5% total).
  • Nova Scotia – adds 15% as harmonised sales tax (HST) to the total amount of taxable purchases (15% in total).
  • Nunavut – no PST, only full GST (total 5%).
  • Ontario – PST and GST were abolished and replaced by a harmonised sales tax of 13% on 1 July 2010 (13% in total).
  • Prince Edward Island – adds 14% to total taxable purchases in the form of Harmonised Sales Tax (HST) (14% total).
  • Quebec – as of 2013, 9.975% is added to the total taxable purchase plus GST/GST.
  • Saskatchewan – adds 5% to total taxable purchase plus GST (total 10%).
  • Yukon – no PST, only full GST (total 5%)

Some products (e.g. alcohol and petrol) are subject to additional taxes that vary by province; however, these taxes are often included in the displayed price of the product. The displayed price of fuel at the pump includes all taxes.