Paper Money

Canada notes in obsolete denominations losing legal tender status

Certain denominations of Canadian notes, including the $25 and $500 issues, will lose their legal tender status starting Jan. 1, no longer to be accepted for commercial transactions.

Image courtesy of Heritage Auctions

The Bank of Canada issued a reminder on Nov. 19 that the $1, $2, $25, $500 and $1,000 notes, all of which are no longer being produced, will lose their legal tender status on Jan. 1, 2021.

The action is in compliance with amendments to the Bank of Canada Act and the Currency Act approved by Parliament in 2018. The notes in question will retain their face value and will still be redeemable at commercial banks or at the Bank of Canada itself. However, it will no longer be possible to use them in commercial transactions.

Most Canadians will not be affected because the bank notes included in the reminder have not been produced in decades and are rarely used in transactions. The $1 and $2 notes stopped being issued in 1989 and 1996, respectively, and were replaced with coins of the same denominations.

It is doubtful that anyone would be foolish enough to bring a $25 or $500 note in for redemption.

The $25 note was a commemorative note dated May 6, 1935, issued in English and French language versions for the 25th anniversary of the reign of King George V. It features the portraits of the king and Queen Mary with Windsor Castle on the reverse. Only 160,000 were printed and around 3,000 remain outstanding. Very Fine examples now sell for in excess of $5,000.

The $500 note was also issued in 1935 and is the only note of the denomination issued by the Bank of Canada. Other, earlier notes of that value were under the authority of the Dominion of Canada. It has a portrait of Sir John A. Macdonald, Canada’s first prime minister, wearing a fur-collared coat, and on the back, an allegorical figure representing fertility. In total, 20,900 English versions and 5,000 in French were printed, but most were not issued and were destroyed a few years later. Those that entered circulation were soon withdrawn. An English version graded Very Fine 25 by Paper Money Guaranty sold for $97,750 Canadian in 2014.

The $1,000 note stopped being issued and began being withdrawn in 2000. It is probably the real intended target of the action. The Canadian Broadcasting Company said that more than 700,000 of them were still outstanding in 2018, and that they are commonly used by organized crime since it is an easy vehicle for moving large amounts of money.

The bank also indicated that it intends to crack down on counterfeiting, money laundering and tax evasion.

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