1. What is Adjusted Cost Base (ACB)?

The Adjusted Cost Base (ACB) is the average cost of all shares owned in a particular stock, including commissions and other transaction costs. It's used in Canada for calculating capital gains or losses when selling investments.

2. How Does the Calculator Work?

The calculator uses the ACB formula:

Where:

• \( Total\ Cost \) — Total purchase price of all shares (currency)
• \( Commissions \) — Total commissions and transaction fees (currency)
• \( Total\ Shares \) — Total number of shares owned (shares)

Explanation: The ACB represents the average cost per share, including all acquisition costs, which is essential for accurate capital gains calculations.

3. Importance of ACB Calculation

Details: Accurate ACB calculation is crucial for determining capital gains tax liability when selling investments. It ensures proper tax reporting and helps optimize investment decisions by tracking true investment costs.

4. Using the Calculator

Tips: Enter total cost in currency, commissions in currency, and total shares. All values must be valid (cost ≥ 0, commissions ≥ 0, shares > 0). The result shows ACB in currency per share.

5. Frequently Asked Questions (FAQ)

Q1: Why is ACB important for Canadian investors?
A: ACB is used to calculate capital gains or losses for tax purposes in Canada. When you sell shares, the difference between selling price and ACB determines your taxable gain or loss.

Q2: What costs are included in ACB?
A: ACB includes purchase price, commissions, legal fees, and other acquisition costs. It excludes ongoing costs like management fees or interest on borrowed money.

Q3: How does ACB change with multiple purchases?
A: With each new purchase, the ACB is recalculated as the weighted average of all shares owned, including the new purchase and associated costs.

Q4: What if I receive stock dividends or splits?
A: Stock dividends and splits adjust your ACB downward since you're receiving additional shares without additional cost, spreading your original cost over more shares.

Q5: How do I track ACB for multiple transactions?
A: For multiple transactions, you need to track each purchase separately and calculate cumulative ACB. Consider using investment tracking software for complex portfolios.