Adjusted Cost Base

Adjusted Cost Base

Adjusted cost base (ACB) is a calculation used to determine the cost of an investment for tax purposes. The Canada Revenue Agency requires investors to use the ACB calculation when determining capital gains or losses for income tax purposes on Schedule 3.

Uses

In Mutual Funds:

In some cases, ACB is presented as ACB/unit:

Note: "These are simplified equations. In some case, other values are included (ex. commission fees)"

It is possible that the ACB might never change if there are no additions or disposals following the initial purchase amount. However, any additions or subtractions to the initial investment needs to be plugged into the above equations since it will have an effect on the ACB. It is for this reason that ACB is recalculated after each transaction.

Dividends that are cashed out and not reinvested don't change the ACB. A redemption will not change the ACB/unit but the reduction of the total unit cost for a redemption is calculated as ACB x units sold. It is not the market value of the units sold.

Dividends that are deemed/notional will increase the ACB but will not change the number of units held, nor will it change the overall market value.

An increase in the ACB will reduce the amount of capital gains realized at time of disposition. Deferred Sales Charge (DSC) charged at time of redemption will not impact the ACB. However, the amount of DSC charged may be claimed as an expense when filing the "Capital gains (or losses)" section of the income tax return.

In Selling Property:

The calculation of ACB for property is complicated by numerous exceptions too complex to discuss in this forum. Please see the Canada Revenue Agency [http://www.cra-arc.gc.ca/E/pub/tg/t4037/t4037-05-e.html#P1992_91847/ definition]

ee also

* Canada Revenue Agency
* Capital Gain

External links

* [http://www.cra-arc.gc.ca/E/pub/tg/t4037/ Canada Revenue Agency Website - Adjusted Cost Base]
* [http://www.fiscalagents.com/newsletter/4abcacb.shtml/ ABC's of ACB]
* [http://www.aimtrimark.com/AIM/Resources/Taxes/Tax_Bulletins/TBMFTRE.pdf/ Understanding mutual fund trusts and corporations]
* [http://www.bmo.com/mutualfunds/ec/index.html/ BMO Mutual Funds - Mutual Fund Basics]


Wikimedia Foundation. 2010.

Игры ⚽ Поможем решить контрольную работу

Look at other dictionaries:

  • Adjusted Cost Base - ACB — An income tax term that refers to the change in an asset s book value resulting from improvements, new purchases, sales, payouts or other factors. An adjusted cost base can be calculated on a single or a per unit basis. The book value can be… …   Investment dictionary

  • Adjusted present value — (APV) is a business valuation method. APV is the net present value of a project if financed solely by ownership equity plus the present value of all the benefits of financing. Firstly, it was studied by Stewart Myers, a professor at the MIT Sloan …   Wikipedia

  • Cost of living — For other uses, see The Cost of Living (disambiguation). Cost of living is the cost of maintaining a certain standard of living. Changes in the cost of living over time are often operationalized in a cost of living index. Cost of living… …   Wikipedia

  • Adjusted gross income — Part of a series on Taxation Taxation in the United States …   Wikipedia

  • History of Clark Air Base — The history of Clark Air Base, Philippines dates back to the late 19th century when it was settled by Filipino military forces. The United States established a presence at the turn of the century. The Americans First Come to Angeles , numbering… …   Wikipedia

  • option-adjusted spread — ( OAS) (1) A measurement of the return provided to an investor from a financial instrument that is either an option or that includes an option. The option adjusted spread calculations break up a security into separate cash flows. Each of those… …   Financial and business terms

  • Option-adjusted spread (OAS) — (1) The spread over an issuer s spot rate curve, developed as a measure of the yield spread that can be used to convert dollar differences between theoretical value and market price. (2) The cost of the implied call embedded in a MBS, defined as… …   Financial and business terms

  • ACB — may refer to:In banking:* African Central Bank, one of the three financial institutions of the African Union * Asia Commercial Bank, a commercial bank in Vietnam. * Asia Commercial Bank, a licensed bank in Hong Kong * Associated Credit Bureau see …   Wikipedia

  • Buy term and invest the difference — Buying term and investing the difference is a concept involving term life insurance and investment strategies that allow individuals to eventually Self Insure and provides an alternative to permanent life insurance. Generally speaking term… …   Wikipedia

  • Jan Kulczyk — Nacimiento …   Wikipedia Español

Share the article and excerpts

Direct link
… Do a right-click on the link above
and select “Copy Link”