How do you calculate adjusted cost base of an investment?
The Canada Revenue Agency (CRA) generally defines adjusted cost base (ACB) as “the cost of a property plus any expenses to acquire it, such as commissions and legal fees”. The ACB is used in the calculation of capital gains and losses for income tax purposes.
Investments such as stocks or mutual funds are considered “identical properties,” by the CRA. The CRA has outlined rules as how to calculate the ACB, especially if you acquired units of stocks or mutual funds at different points in time. Generally, you have to average the purchase price of the investment you bought during the year and use this average as your ACB. Learn more about how to calculate the ACB of identical properties from the CRA.
It is important for you to keep all records of your investment transactions and consult your income-tax advisor to properly determine your ACB and calculate your gains and losses for income-tax purposes.