1. What is Adjusted Cost Base (ACB)?

The Adjusted Cost Base (ACB) is the average cost of purchasing shares of a stock, including all associated fees and commissions. It represents the true cost per share for tax purposes when calculating capital gains or losses.

2. How Does the Calculator Work?

The calculator uses the ACB formula:

Where:

• \( Total\ Purchase\ Cost \) — Total amount paid for all shares (currency)
• \( Fees \) — Total brokerage fees, commissions, and transaction costs (currency)
• \( Total\ Shares \) — 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 total number of shares acquired.

3. Importance of ACB Calculation

Details: Accurate ACB calculation is crucial for determining capital gains or losses when selling investments, which directly impacts tax liability. Proper ACB tracking ensures compliance with tax regulations and optimizes investment returns.

4. Using the Calculator

Tips: Enter the total purchase cost in your local currency, include all transaction fees and commissions, and provide the exact number of shares purchased. All values must be positive, with total shares greater than zero.

5. Frequently Asked Questions (FAQ)

Q1: Why is ACB important for investors?
A: ACB determines the cost basis for tax purposes when calculating capital gains or losses upon selling investments, directly affecting your tax liability.

Q2: What costs should be included in ACB?
A: Include all purchase costs: share price, brokerage commissions, transaction fees, and any other acquisition-related expenses.

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

Q4: Does ACB change with multiple purchases?
A: Yes, ACB is recalculated each time you purchase additional shares, creating a weighted average cost across all holdings.

Q5: Are dividends included in ACB?
A: No, dividends are separate investment income and do not affect the ACB calculation for the underlying shares.