1. What Is Adjusted Cost Base?

Adjusted Cost Base (ACB) is the average cost per share of an investment, including all acquisition costs such as commissions and fees. It is used for tax purposes to calculate capital gains or losses when selling investments.

2. How Does The Calculator Work?

The calculator uses the ACB formula:

Where:

• \( \text{Total Cost of Shares} \) — Total purchase price of all shares ($)
• \( \text{Commissions} \) — Brokerage commissions and fees ($)
• \( \text{Number of Shares} \) — Total number of shares purchased (shares)

Explanation: The formula calculates the average cost per share by dividing the total investment cost (including fees) by the number of shares owned.

3. Importance Of ACB Calculation

Details: Accurate ACB calculation is essential for determining capital gains tax liability when selling investments. It helps investors track their true investment cost and optimize tax strategies.

4. Using The Calculator

Tips: Enter total cost in dollars, commissions in dollars, and number of shares. All values must be valid (cost ≥ 0, commissions ≥ 0, shares > 0).

5. Frequently Asked Questions (FAQ)

Q1: Why is ACB important for tax purposes?
A: ACB determines the cost basis for calculating capital gains or losses when you sell investments, which directly affects your tax liability.

Q2: What costs are included in ACB?
A: ACB includes the purchase price of shares plus all acquisition costs like brokerage commissions, transaction fees, and other direct costs.

Q3: How does ACB affect capital gains calculation?
A: Capital gain = Selling price - ACB. A lower ACB results in higher capital gains and potentially higher taxes.

Q4: Does ACB change with additional purchases?
A: Yes, ACB is recalculated each time you purchase additional shares of the same security, creating a new average cost.

Q5: Are dividends reinvested included in ACB?
A: Yes, dividends that are reinvested to purchase additional shares increase your ACB for those additional shares.