Canadian Dollar - Legal Tender

Legal Tender

Canadian dollar banknotes issued by the Bank of Canada are legal tender in Canada. However, commercial transactions may legally be settled in any manner agreed by the parties involved.

Legal tender of Canadian coinage is governed by the Currency Act, which sets out limits of:

• $40 if the denomination is $2 or greater but does not exceed $10;
• $25 if the denomination is $1;
• $10 if the denomination is 10¢ or greater but less than $1;
• $5 if the denomination is 5¢;
• 25¢ if the denomination is 1¢.

Retailers in Canada may refuse bank notes without breaking the law. According to legal guidelines, the method of payment has to be mutually agreed upon by the parties involved with the transactions. For example, stores may refuse $100 bank notes if they feel that would put them at risk of being counterfeit victims; however, official policy suggests that the retailers should evaluate the impact of that approach. In the case that no mutually acceptable form of payment can be found for the tender, the parties involved should seek legal advice.

Canadian dollars, especially coins, are accepted by some businesses in the northernmost cities of the United States and in many Canadian snowbird enclaves, just as US dollars are accepted by some Canadian businesses.

In 2012, Iceland began to consider adopting the Canadian dollar as a stable alternative to the Icelandic krona. although it ultimately decided not to move to the next stage with the proposal.