ACB — Adjusted Cost Base

The ACB (Adjusted Cost Base) is the weighted average cost of your investments for Canadian tax purposes. It's the basis for calculating your capital gains or losses to report to the CRA.

ACB Formula

ACB = (Total purchase cost + commissions + fees) / Total quantity

When you buy in multiple lots, ACB is recalculated each purchase (weighted average).

Concrete example

Purchase 1: 100 shares @ $50 + $5 commission = $5,005 for 100 shares
Purchase 2: 50 shares @ $60 + $5 commission = $3,005 for 50 shares
Total ACB: ($5,005 + $3,005) / 150 = $53.40/share

Superficial Loss Rule

If you sell at a loss and repurchase the same security within 30 days, the loss is denied and added to the new ACB. CRA anti-avoidance rule.

USD → CAD conversion

For US securities, ACB must be in CAD. Convert each transaction at day's Bank of Canada rate. WealthWise automates this.

Frequently Asked Questions

Does ACB apply in a TFSA?

No. TFSA being tax-free, ACB doesn't matter for tax. But useful for tracking returns.

How does CRA verify my ACB?

CRA can audit. Keep broker statements + ACB calculations for at least 6 years.

Do dividends affect ACB?

Reinvested dividends (DRIP) increase ACB. Cash dividends don't affect ACB.

How to calc ACB after stock split?

Divide ACB per share by split ratio. Example 2:1 split: ACB/share ÷ 2.

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