Glossary  -> Adjusted cost base

Adjusted Cost Base (ACB), or Cost Basis

The adjusted cost base (ACB) includes the original purchase price, and all costs related to the purchase of an item.

The adjusted cost base, or cost basis, of an investment in securities would include the purchase price, as well as any commission paid.  The cost basis is calculated separately for each security owned.  It is the total cost of all shares owned, and is divided by the total number of shares owned to get the cost basis per share, or weighted average cost per share.  This cost per share is used in calculating any capital gains or losses when some or all of the shares are sold.

The adjusted cost base of an interest-paying investment such as a bond would not include any amount for interest accrued since the last interest payment date.

The adjusted cost base of a fixed asset such as machinery or equipment would include installation costs, customs brokerage and legal fees, and any other costs expended to get the asset into operation.

The adjusted cost base of a rental property would include any repairs or renovations that cannot be expensed for tax purposes.  Examples of this type of repair would be a new roof, new appliances, etc.

There may be costs related to any fixed asset (for instance, major repairs that extend the life of the asset) that must be added to the adjusted cost base instead of being expensed.