What’s The Currency Act In Canada?
Canada’s Currency Act was formulated to respect the country’s currency and the Exchange Fund Account. It has laws on how to handle cash, all the monetary units, and the offences and punishments for citizens who violate the act.
This guide will explore the Currency Act in Canada, including the rules and regulations governing the currency’s usage. You will also learn the consequences of breaking the laws.
That said, let’s get started.
Consequences Of Going Against Federal Government Laws
Being well-versed on the Currency Act in Canada will not only afford you an easier time when trading, but it will also help to ensure you make sound decisions that don’t get you in trouble with the law.
Some of the consequences you could face for failing to comply with the laws are:
Fines
An individual or organization can get fined for not complying with the Currency Act. The penalty amount will depend on what law was infringed upon and the consequence for doing so.
Imprisonment
Violating certain aspects of the Currency Act could also result in imprisonment. The number of months or years for imprisonment also depends on the crime.
Although some people avoid custodial sentences based on the plea, the court could issue a criminal conviction. This restricts the accused from travelling outside the country and working in specific industry sectors, among other stipulations.
Loss Of Reputation
Potential employees and investors look at a company’s reputation before signing a contract with them. Failing to comply with the law can damage your reputation.
Loss of reputation also happens to individuals. It will be hard to secure a job from reputable companies if you have a pending case with the federal government.
More Inspections And Audits
Failure to comply with the Currency Act as a company could lead to more monitoring and audits. Audits are draining because they require a lot of time, and the company spends money putting their records together.
Besides, when employees sense instability in the company, this could lead to a lower level of employee retention. Losing employees leads to reduced production, hence losses.
Licensing
Non-compliance could lead to the termination of a company’s license. Further, you could fail to qualify for a license if the government concludes that your business is not legitimate.
Currency Act Canada
There are many provisions in Canada’s Currency Act that every citizen should be familiar with.
The Monetary Unit
Canada’s monetary unit is the Dollar, and the denominations are dollars and cents. A coin in the currency is only recognizable if it was issued by the Royal Canadian Mint.
The Central Bank of Canada does not recognize bent, mutilated, or defaced coins. As well, a coin that weighs less than the rest should not be in circulation. A note is recognizable if the Bank of Canada Act authorizes it to circulate.
Legal Tender
The currency Act states that a tender of payment of money is legal only if payments are made in the current coins and notes, as per sections 7 and 7.1.
However, the law restricts the number of coins used for tender payments. A tender will only be legal if payments are made in the following amounts of coins:
- Forty dollars for dominations that are two dollars and above, but less than ten dollars
- Twenty-five dollars for denominations of one dollar
- Ten dollars for denominations of ten cents and above, but they should be less than one dollar
- Five dollars for denominations of five cents and twenty-five dollars for denominations of one cent
If the coins are of a denomination that is more than ten dollars, the law allows the payment tender to have only one coin. Also, the payment tender is only legal for the value of one coin of that denomination.
If different payments are made by one person to another on the same day, the amounts are combined.
Law On Redemption Of Coins
Only the minister of finance authorizes payments of redemption of coins, and the expenses are made from the Consolidated Revenue Fund. However, only the currencies that have been current in the past are eligible for redemption.
Counterfeit Coins
Officers in charge of collecting revenues in Canada can break coins and tear counterfeit notes. They should also forward the counterfeit coins to the finance minister.
The law prohibits people from melting down a coin unless they are licensed by the minister to do so. Any current coins and notes in Canada should only be used as currency.
Any person who breaks the law on melting coins could be convicted for a fine of $250, a prison sentence of twelve months, or both.
Public Accounts And Statements
The Canada currency Act states that the money in all public accounts in Canada should be in the Canadian Dollar.
Contracts
All the contracts, sales, or payments of bills dealing with money should be in Canadian currency. However, the contracts signed before October 15, 1952, can operate without adhering to this Act.
The Valuation Of Gold
The Governor in Council will make regulations to specify the methods used to determine the dollar value of another country’s currency, gold, or another mineral.
Exchange Fund Account
The goal of the Exchange Fund Account is to protect Canada’s currency value and provide a source of liquidity for the Canadian government.
The law allows the finance minister to establish a policy about purchasing the assets held in the Exchange Fund Account.
Also, the law allows the minister to acquire or borrow the assets held in the Exchange Fund Account. According to the policy, they can also sell those assets and carry out any financial transactions.