Adjusted cost base

In the Canadian tax system the term Adjusted cost base (ACB) refers to the cost of an investment adjusted for several tax-related items including acquisition costs.{{Cite web|url=https://www.advisor.ca/my-practice/continuing-education/as-easy-as-acb-understanding-and-tracking-adjusted-cost-base-with-etfs/|title=As easy as ACB: Understanding and tracking adjusted cost base with ETFs|date=2014-06-02|website=Advisor|language=en|access-date=2019-05-16}} It is used in the calculation of capital gains or losses.

==Calculation==

For Stocks, Mutual Funds and Bonds:

class="wikitable" | ACB = initial investment + additional contributions + fees and commissions - amount of any previous sales or redemptions

ACB can also be presented as ACB/unit:

class="wikitable" | Average ACB/unit = (initial investment + additional contributions + fees and commissions - amount of any previous sales or redemptions) / total number of units currently held

Note: Additional contributions includes any reinvested distributions.

An increase in the ACB will reduce the amount of capital gains realized at time of disposition. Mutual fund front end or deferred sales charges are treated like purchase and sale commissions for tax purposes.{{Citation needed|reason=Old link no longer points to relevant information|date=October 2022}}

For Selling Property:

Capital improvements made to a property are added to the ACB of that property. Capital improvements generally extend the life of a property and specifically exclude routine repairs and maintenance.{{Cite web|url=https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/personal-income/line-127-capital-gains/calculating-reporting-your-capital-gains-losses/adjusted-cost-base.html|title=Adjusted cost base (ACB)|last=Agency|first=Canada Revenue|date=2017-06-22|website=aem|access-date=2019-05-16}}

Acquisition costs such as legal fees, land transfer tax, land surveys and property inspections increase the ACB of a property. Interest paid on debt used to acquire vacant land is added to the ACB of the land.