Your adjusted cost base: A moving target

It’s no secret that Canadians want to reduce the tax they pay. If you are an investor, one way to help reduce your taxes is to ensure you maximize the adjusted cost base (ACB) of your investments.

When you sell a capital property, such as a mutual fund investment, a share, or even real estate, the difference between your proceeds of disposition and your ACB becomes a capital gain (or capital loss) subject to tax. The bottom line? If you can increase your ACB, you can reduce your capital gain, and in turn your tax bill.

Many investors simply believe that their ACB is the amount they paid for their investment. For some investors, the ACB is simply the purchase price, but there are many situations where there is more to your calculation of the ACB.