1. What is Adjusted Cost Base?

The Adjusted Cost Base (ACB) is the average cost of an investment that includes all purchases and associated fees. It represents the tax basis for capital gains calculations and is essential for accurate tax reporting on investment transactions.

2. How Does the Calculator Work?

The calculator uses the ACB formula:

Where:

• \( Total\ Cost \) — Total purchase price of shares (currency)
• \( Fees \) — Commissions and transaction fees (currency)
• \( Shares \) — Number of shares held (count)

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 crucial for determining capital gains or losses when selling investments. It ensures proper tax reporting and helps investors understand their true investment performance.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: Why is ACB important for taxes?
A: ACB determines the capital gain or loss when you sell investments. The difference between selling price and ACB is your taxable capital gain or deductible loss.

Q2: What costs are included in ACB?
A: ACB includes purchase price, commissions, legal fees, and other acquisition costs. It excludes ongoing expenses like management fees.

Q3: How does ACB change with multiple purchases?
A: With multiple purchases, ACB is recalculated as a weighted average of all purchases and their associated costs.

Q4: What happens when I sell only part of my holdings?
A: When selling partial holdings, you use the ACB to calculate gains on the sold portion while maintaining the original ACB for remaining shares.

Q5: Are there special rules for reinvested dividends?
A: Yes, reinvested dividends typically increase your ACB as they represent additional purchases of shares.