1. What is Adjusted Cost Base?

The Adjusted Cost Base (ACB) is the average cost per share of an investment, accounting for all purchases, fees, and returns. It's used for tax purposes to determine capital gains or losses when selling investments.

2. How Does the Calculator Work?

The calculator uses the ACB formula:

Where:

• \( Total\ Cost \) — Total purchase price of all shares (currency)
• \( Fees \) — Total transaction fees and commissions (currency)
• \( Returns \) — Any returns of capital or distributions (currency)
• \( Shares \) — Total number of shares owned (count)

Explanation: The formula calculates the average cost per share by considering all costs associated with acquiring the investment, adjusted for any capital returns.

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 costs and optimize tax strategies.

4. Using the Calculator

Tips: Enter total cost in currency, fees in currency, returns in currency, and total shares as a whole number. All values must be valid (non-negative numbers, shares > 0).

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 impacting tax liability.

Q2: How does ACB differ from average cost?
A: ACB includes all acquisition costs (fees, commissions) and adjusts for returns of capital, providing a more accurate cost basis than simple average purchase price.

Q3: When should I update my ACB?
A: Update ACB after each purchase, when receiving returns of capital, or when reinvesting distributions to maintain accurate records.

Q4: What happens if I don't track ACB properly?
A: Incorrect ACB can lead to overpaying or underpaying taxes, potential penalties from tax authorities, and inaccurate investment performance tracking.

Q5: Can ACB be negative?
A: No, ACB should never be negative. If calculations show negative ACB, review your inputs for returns exceeding total costs plus fees.