1. What is Adjusted Cost Base?

Adjusted Cost Base (ACB) is the average cost per unit of a mutual fund investment, calculated by dividing the total cost of all units purchased by the total number of units owned. It's used for tax purposes when calculating capital gains or losses.

2. How Does the Calculator Work?

The calculator uses the ACB formula:

Where:

• \( ACB \) — Adjusted Cost Base (currency per unit)
• \( \text{Total Cost} \) — Total investment amount in currency
• \( \text{Total Units} \) — Total number of mutual fund units owned

Explanation: This calculation provides the average cost per unit, which is essential for determining capital gains or losses when units are sold.

3. Importance of ACB Calculation

Details: Accurate ACB calculation is crucial for tax reporting, investment tracking, and making informed decisions about when to buy or sell mutual fund units to optimize tax efficiency.

4. Using the Calculator

Tips: Enter the total cost of your mutual fund investment in your local currency and the total number of units you own. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why is ACB important for mutual fund investors?
A: ACB determines the capital gain or loss when you sell units, which affects your tax liability. A higher ACB means lower capital gains and less tax.

Q2: How does ACB differ from current market price?
A: ACB represents your average purchase cost, while market price is the current value. The difference determines your unrealized gain/loss.

Q3: Does ACB include fees and commissions?
A: Yes, for accurate calculation, include all acquisition costs like brokerage fees and commissions in your total cost.

Q4: How often should I update my ACB?
A: Update ACB after every purchase to maintain accurate records for tax purposes and investment tracking.

Q5: What happens to ACB when I sell units?
A: When you sell units, the ACB of remaining units typically remains unchanged unless you're using specific identification method.