1. What Is Adjusted Cost Base?

The Adjusted Cost Base (ACB) is the average cost of a property including all acquisition costs and adjustments. For CRA tax purposes, it's used to calculate capital gains or losses when you dispose of capital property.

2. How Does The Calculator Work?

The calculator uses the ACB formula:

Where:

• Cost of Acquisition — Original purchase price including commissions and fees
• Adjustments — Additional costs like reinvested dividends, capital improvements
• Number of Shares — Total shares owned (using average cost method)

Explanation: The ACB represents the average cost per share or unit, which is crucial for determining capital gains when you sell only part of your holdings.

3. Importance Of ACB Calculation

Details: Accurate ACB calculation is essential for CRA tax compliance. It determines your capital gain or loss, which affects your tax liability. Using the correct ACB ensures you pay the appropriate amount of tax on investment dispositions.

4. Using The Calculator

Tips: Enter the total cost of acquisition (including fees), any adjustments to the cost base, and the number of shares. All values must be positive numbers with shares being at least 1.

5. Frequently Asked Questions (FAQ)

Q1: What costs are included in ACB?
A: Purchase price, commissions, legal fees, accounting fees, and any other costs directly attributable to the acquisition.

Q2: What adjustments affect ACB?
A: Stock dividends, return of capital distributions, capital improvements to property, and certain corporate actions.

Q3: How does ACB affect capital gains?
A: Capital gain = Proceeds of disposition - ACB. A higher ACB means lower capital gains and less tax.

Q4: Is ACB the same for all identical properties?
A: Yes, CRA requires using the average cost method for identical properties, so all shares of the same class have the same ACB.

Q5: How often should I update my ACB?
A: Update ACB whenever you acquire additional shares, receive return of capital distributions, or when other adjustments occur.