1. What Is Adjusted Cost Base (ACB)?

Adjusted Cost Base (ACB) is a tax term used in Canada to determine the average cost of an investment for capital gains tax purposes. It represents the average price paid per share or unit of an investment, including all acquisition costs.

2. How Does The Calculator Work?

The calculator uses the ACB formula:

Where:

• \( ACB \) — Adjusted Cost Base per share (CAD/share)
• \( \text{Total Cost} \) — Total investment cost including commissions (CAD)
• \( \text{Total Shares} \) — Total number of shares owned (shares)

Explanation: This calculation provides the average cost per share, which is essential for determining capital gains or losses when selling investments.

3. Importance Of ACB Calculation

Details: Accurate ACB calculation is crucial for Canadian tax reporting. It determines the capital gain or loss when disposing of investments, directly impacting your tax liability. Proper ACB tracking ensures compliance with CRA requirements.

4. Using The Calculator

Tips: Enter total cost in Canadian dollars (including all transaction fees and commissions) and total number of shares. Both values must be positive numbers greater than zero.

5. Frequently Asked Questions (FAQ)

Q1: What costs should be included in total cost?
A: Include all acquisition costs: purchase price, commissions, brokerage fees, and any other expenses directly related to acquiring the shares.

Q2: How does ACB affect capital gains tax?
A: Capital gain = Selling price - ACB. Only 50% of capital gains are taxable in Canada, making accurate ACB calculation essential for proper tax reporting.

Q3: What if I bought shares at different prices?
A: For multiple purchases, calculate the weighted average cost. Add all purchase costs and divide by total shares to get the overall ACB.

Q4: Are there special rules for reinvested dividends?
A: Yes, reinvested dividends increase your ACB as they represent additional investments in the security.

Q5: How often should I update my ACB calculations?
A: Update ACB after every purchase or corporate action (splits, mergers) to maintain accurate records for tax purposes.