ACB stands for adjusted cost base. In simple terms, it is the running cost of an investment you hold in a non-registered account.
You need it to calculate your capital gain or loss when you sell. The CRA explains how ACB is used in its guide to calculating and reporting capital gains and losses.
The idea sounds straightforward:
Sale proceeds − ACB of the shares sold − outlays and expenses on the sale = capital gain or loss
The difficult part is keeping the ACB correct over time.
A simple example
Suppose you buy 10 shares for $100 each and pay a $10 commission.
Your total ACB is $1,010.
Later, you buy another 5 shares for $120 each and pay another $10 commission. Your total ACB is now $1,620 across 15 shares, or $108 per share.
If you sell 6 shares, the ACB of those shares is $648.
You still hold 9 shares with a remaining ACB of $972.
This is why you cannot simply use the price of your latest purchase. Purchases of the same investment are generally treated as identical properties, so each purchase changes the average cost of the position.
Why the number from your brokerage may not be enough
It is easy to assume that the book value shown by your brokerage is your ACB. Sometimes it is close. Sometimes it is not.
The CRA specifically notes that the amount shown in box 20 of a T5008 may or may not reflect your ACB.
The brokerage may not know about:
- Shares held at another brokerage
- Investments transferred from another account
- Commissions and transaction fees
- Return of capital
- Reinvested distributions
- Superficial losses
- Corrections made outside the brokerage
If you own the same investment in more than one non-registered account, you may need to track the combined ACB across those accounts. Looking at each brokerage separately can give you an incomplete answer.
Foreign currency makes it harder
US investments add another complication.
For Canadian reporting, the purchase and sale generally need to be converted into Canadian dollars using the applicable exchange rate for each transaction. The CRA’s capital gains guidance explains that the purchase cost and sale proceeds are converted using the exchange rates that applied when each transaction occurred.
Suppose you buy a US stock for US$1,000 and later sell it for the same US$1,000. It may look like you broke even.
But if the Canadian dollar changed between the purchase and the sale, you could still have a gain or loss in Canadian dollars.
This was one of the problems that pushed me to build Adjustibl. I could see the US-dollar price of an investment, but that did not tell me what my actual Canadian-dollar cost was or whether selling would produce a gain or loss.
Why track ACB before you sell?
Many people only try to reconstruct their ACB when they are preparing a return. By then, they may be working through years of statements, transfers, currency conversions, and missing details.
Tracking it as transactions happen gives you a much clearer picture.
You can see:
- How much you have actually invested
- Your average cost per share
- The ACB attached to a sale
- Your remaining ACB after the sale
- Whether the sale produced a gain or loss in Canadian dollars
- Which transactions changed the calculation
It also makes the final result easier to review. Instead of receiving a number with no context, you can trace it back to the transactions that produced it.
ACB is a running history
ACB is not a number you calculate once and forget about. It changes as new activity happens.
Every purchase, sale, fee, distribution, and adjustment can affect the history. A superficial loss can also change the ACB of the replacement investment.
If one transaction is missing or recorded incorrectly, the error can carry forward into later calculations.
That is the real reason to track ACB. It is not just about producing a number at the end of the year. It is about understanding what you own, what it cost you, and what happened when you sold it.