The definition
Adjusted cost base is the tax cost of a property — for investors, usually the total amount you paid for a holding, including commissions, plus or minus a series of adjustments, divided by the number of units you own. It is the figure you subtract from your sale proceeds to calculate a capital gain or loss.
Canada requires the pooled average-cost method. If you buy the same security at different prices over time, you do not track each lot separately or choose which shares you sold — you average them into one pool and every sale uses that averaged per-unit cost. This ACB is the denominator in every capital gains tax calculation.
What raises and lowers your ACB
Your cost base is not static. Common events move it:
| Event | Effect on ACB |
|---|---|
| Buying more units (incl. commission) | Raises total ACB; re-averages per-unit cost |
| Reinvested / phantom distribution (T3 box 21) | Raises ACB |
| Return of capital (T3 box 42) | Lowers ACB |
| Stock split / consolidation | Rescales per-unit ACB (total unchanged) |
| Superficial loss denied on a sale | Denied loss is added to the rebuy’s ACB (details) |
Selling units does not change your per-unit ACB — you simply dispose of some of the pool at the current average cost.
US-dollar holdings and FX
ACB is always tracked in Canadian dollars. For a US-dollar security, each purchase is converted at the Bank of Canada exchange rate on the trade date, and the sale is converted at the rate on its own date. The currency movement between buying and selling is itself part of your capital gain — which is why you cannot just track the US-dollar cost and convert at the end. See the full guide on reporting USD trades.
The same security in multiple accounts
If you hold the identical security at two brokers, or in two non-registered accounts, the CRA treats it as a single pool. Your ACB per share reflects everything you own, not one statement in isolation. This is one of the most common sources of error, because each broker only sees — and only reports — the account held with them. Our guide to ACB across multiple brokers explains the pitfalls in detail.