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About legal tender

Find out what "legal tender" means, why legal tender status changes, and how to redeem older bank notes.

Bank notes issued by the Bank of Canada, together with coins issued by the Royal Canadian Mint, are what is known as "legal tender." That's a technical term meaning the Government of Canada has deemed them to be the official money we use in our country. In legal terms, it means "the money approved in a country for paying debts."

Today, money is not just bank notes or coins. It takes many different forms, including credit cards, debit cards, cheques, and the contactless payments we make using mobile devices. You can pay with any of these forms of money, even though they are not considered "legal tender." In fact, anything can be used if the buyer and seller agree on the form of payment.

Why legal tender status changes

Amendments to the Bank of Canada Act and the Currency Act approved by Parliament in 2018 gave the Government of Canada the power to remove legal tender status from bank notes—something it could not do before.

The Minister of Finance is responsible for both the Bank of Canada Act and the Currency Act, and the changes made to allow the removal of legal tender status from bank notes were initiated by the Minister in consultation with the Bank of Canada and other agencies. The Bank fully supports the amendments.

Having the power to remove legal tender status from bank notes is a way to complete their removal from circulation and to help ensure that Canadians have access to the most current and secure bank notes. It also guarantees they are always easy to spend since recent notes are more recognizable to merchants.

The government currently has no plans to take any bank notes other than the $1, $2, $25, $500 and $1,000 notes out of circulation. It will be able to remove other notes in the future as needed.

Source. https://www.bankofcanada.ca/banknotes/about-legal-tender/?theme_mode=light