Adjusted cost base (ACB) - Canada.ca (2024)

FAQs

How to calculate adjusted cost basis in Canada? ›

To calculate the Adjusted Cost Base (ACB), you will simply divide your current Book Cost by the number of shares you currently hold.

Your adjusted basis is generally your cost in acquiring your home plus the cost of any capital improvements you made, less casualty loss amounts and other decreases.

The lifetime capital gains exemption (LCGE) for capital gains realized on the disposition of qualified small business corporation shares and qualified farm or fishing property has been part of the Canadian income tax system for over a generation. The amount of the LCGE is an indexed amount and is $1,016,836 in 2024.

To calculate an asset's or security's adjusted basis, you simply take its purchase price and then add or subtract any changes to its initial recorded value. Capital gains tax is paid on the difference between the adjusted basis and the amount the asset or investment was sold for.

The new ACB is calculated by dividing the total cost of the shares of STU Ltd. ($1,500 + $3,000 = $4,500) by the total number of shares she has purchased (100 + 150 = 250). Therefore, the ACB is $18.00 ($4,500 ÷ 250).

Understanding the New Capital Gains Tax

The capital gains tax changes in Canada took effect starting June 25, 2024. These changes include increasing the capital gains inclusion rate from 50% to 66.67% for capital gains over $250,000 annually for individuals and for all capital gains for corporations and most trusts.

The full $500,000 capital gain would be exempted from tax under the principal residence exemption. Since they had no taxable capital gains in the current and prior three tax years, the $75,000 net capital losses can be applied without adjustment to offset pension income from 2025 and 2026 (i.e., $37,500 in each year).

In Canada, it isn't advisable to transfer ownership of real estate to family members for anything other than the fair market value. However, an alternative would be to give the person cash they can then use to purchase the property at the fair market value.

How long do I have to live in my rental property to avoid capital gains in Canada? To minimize capital gains tax in Canada, you must designate the property as your principal residence for each year you own it. The number of years that you can claim the principal residence exemption is limited to four years.

What is the 6 year rule for capital gains tax? ›

CGT 6-Year Rule

Allows temporary renting of PPOR for up to 6 years while still claiming main residence exemption. – Each 6-year absence period is treated individually. - No limit on number of times you can use this exemption. - Property must have been your main residence before renting out.

Because of the principal residence exemption, if you inherit real estate and it is a primary place of residence, you will not owe capital gains tax if you sell it later on. But if you inherit property and sell it for a profit without it being your primary residence, then the rules of capital gains tax apply.

If you purchased shares through a broker and paid commissions, those costs would be added to your cost basis. So if you bought your 10 shares of XYZ from a broker for $100 per share and paid a 1% commission to place that trade, your cost basis would be $1,000 + (1% x $1,000), or $1,010.

We recomputed the Adjusted Capitalized Cost as the difference between the Gross Capitalized Cost and the Capital Cost Reduction, calculated as the “Total Price” amount less the sum of the “Cash Down Payment” and “Net Trade-in Allowance” amounts, as set forth in the Source Document, and compared this amount to the ...

The cost base of a capital gains tax (CGT) asset is generally what it cost you to buy it, plus other costs you incur to hold and dispose of it.

You can figure the adjusted basis of your partnership interest by adding items that increase your basis and then subtracting items that decrease your basis. Use the Worksheet for Adjusting the Basis of a Partner's Interest in the Partnership to figure the basis of your interest in the partnership.