1. What is Adjusted Cost Base (ACB)?

The Adjusted Cost Base (ACB) is the average cost of all shares you own in a particular investment. It's used in Canada to calculate capital gains or losses for tax purposes when you sell investments.

2. How Does the Calculator Work?

The calculator uses the ACB formula:

Where:

• \( Total Cost \) — Total amount paid for all shares including commissions
• \( Total Shares \) — Total number of shares owned
• \( ACB \) — Cost per share in dollars

Explanation: The ACB represents the average price you paid per share, which is crucial for determining your capital gain or loss when you sell.

3. Importance of ACB Calculation

Details: Accurate ACB calculation is essential for proper tax reporting. It determines your capital gain (selling price - ACB) or loss, which affects your tax liability.

4. Using the Calculator

Tips: Enter total cost in Canadian dollars (include all commissions and fees), and total number of shares. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What costs should be included in total cost?
A: Include purchase price, commissions, brokerage fees, and any other acquisition costs.

Q2: How is ACB used for multiple purchases?
A: When you make additional purchases, recalculate ACB by adding new costs to total cost and new shares to total shares.

Q3: What if I receive stock dividends or splits?
A: Stock dividends and splits adjust your share count but not your total cost, which affects your ACB calculation.

Q4: How does ACB affect capital gains tax?
A: Lower ACB means higher capital gains when you sell, resulting in more tax. Higher ACB means lower capital gains and less tax.

Q5: Is ACB different for Canadian and US stocks?
A: The calculation method is the same, but currency conversion may be needed for US stocks when reporting to CRA.