How to Track Adjusted Cost Base (ACB) in Canada

Your brokerage shows a book value on your statement. That isn't the number you'll be taxed against, and it's often wrong. What counts is your adjusted cost base, or ACB, and it's everything you've paid for a holding, kept up to date as you go. Buying more moves it. So does a reinvested distribution, a return of capital, and the commission you paid. Selling part of your position doesn't move it at all, because your average cost per unit stays where it was. Nobody keeps this number for you, so the day you sell, the difference between a tracked number and a guessed one is tax you either overpay or still owe.

Key takeaways

• Your ACB is everything you've paid for a holding, commissions included, kept as a running total rather than set once.
• Selling doesn't change your cost per unit. Your total drops, your unit count drops, and the average you carry forward comes out exactly where it started.
• A reinvested distribution raises it and a return of capital lowers it. Skip a reinvestment and you'll pay tax you don't owe. Skip a return of capital and you'll pay less now and more when you sell.
• A registered account has no cost base for you to keep. If everything you hold sits in one, there's nothing here for you to do.
• The book value on your statement is your broker's own figure, and it can't include what your broker doesn't know about.

Everything that counts as what you paid

Your gain gets measured against this number. Take what the sale brought in, subtract your ACB, subtract what the sale itself cost you, and the remainder is your gain. Your sale price sits on a confirmation slip you can go and find. Your ACB is the half of that sum nobody keeps for you.

It begins at the price on your first buy, plus whatever making that buy cost you. A commission counts. So does a legal fee.¹ Say you paid a $10 commission on a $2,000 purchase. You've raised what you paid by $10, which shrinks the gain you'll report years later by the same $10.

It's called adjusted for a reason. You don't set it once and walk away. It shifts for every year you own the investment, and when you finally sell, it can sit nowhere near the price stuck in your head.

Can you choose which shares you sold?

No. Suppose you bought the same fund three times, at $12, at $15 and at $19 a unit, and now you're selling a third of your holding. You'd expect to nominate the units you paid $19 for and report the smaller gain.

Canada doesn't let you. Shares of the same class, and units of the same fund, count as identical to one another. So everything you've ever spent on them goes into one total, divided by how many you hold, and the answer is what each of your units cost you. Buy more and you work it out again.¹

Selling doesn't touch it. Not by a cent. Your total falls by the average cost of whatever you sold, your unit count falls by those same units, and the cost per unit you carry forward lands where it already was.¹ Sell half your holding today and the half you keep costs you the same tomorrow as it did yesterday.

One thing to watch if you own funds. Where you hold more than one class or series of the same fund, each class or series gets its own separate running total and you can't pool them together.²

What moves your ACB, and which way

Five things move it, and they don't all move it the same way.

Buying more raises your total and resets the average at whatever you paid that day.

A commission raises it, because buying is part of what the investment cost you.¹

A reinvested distribution raises it. The fund paid you and bought more units with the money at the same time, and that purchase counts like any other.²

A return of capital lowers it. The fund handed back part of your own money instead of paying you income, so what you're treated as having paid comes down.² There's more to it than the arithmetic, and return of capital goes through what it means for what you own.

A loss the rules won't let you claim raises it. Sell at a loss, buy the same thing back inside thirty days either side of that sale, and still hold it at the end of that window, and you can't deduct the loss in that year. You add it to what you paid for the units you bought back instead, so you get the benefit when you eventually sell those.¹

The distribution you were taxed on but never received

Some funds pay you a distribution and reinvest it at the same time. No cash reaches your bank account, and you probably won't notice a thing. You're still treated as having received that money, so it lands on your tax slip and you pay tax on it for that year.²

You've been taxed on that money already, which is the reason it belongs in what you paid. Leave it out of your record and the same dollars come round again as part of your gain, so you'll pay on them twice.

Your T3 slip reports capital gains the fund passed on to you in box 21. Where the fund reinvested them rather than paying you cash, you add that same amount to what you paid, because the reinvestment bought you more of the fund.²

Box 42 is the separate one, and it moves your cost base in whichever direction its sign points. A positive number comes off what you paid, and a negative number goes on.²

Take enough returns of capital over enough years and what you paid reaches zero. After that there's nothing left to reduce, so anything further counts as a capital gain that year, whether you sold a thing or not.²

One version arrives on no slip at all. When a mutual fund corporation hands back capital, nothing about it appears on your T5, and you're expected to keep track of the amounts yourself so the number stays right.²

Keeping the running total

You need one record per holding, kept somewhere you can find it again. Three columns do the work. What you've spent in total, how many units you hold, and the cost per unit those two make between them.

Then you add a row every time something happens, and that's not only when you trade.

Watch what the sale does in that record. Your total falls and your unit count falls, and the cost per unit comes to rest on the same $20.89 it was already sitting at. So you can sell part of a holding without redoing years of arithmetic.

Start from wherever your records begin. If you've never done any of this, you aren't starting from nothing. Your trade confirmations, your old statements and your annual slips carry most of it between them, and your broker can usually dig out older records than the ones on screen, though you'll have to call and ask for them.

Add every reinvestment and every return of capital. These are the rows people skip, because no money moved into or out of their bank account and nothing looked like a transaction.

Work the average out again after every purchase and every reinvestment.² Never after a sale.

Keep the paperwork. You're asked to keep records six years from the end of the tax year they relate to.³ Treat that as a floor rather than an answer. Your own rows have to last until the day you finally sell, so if you buy a fund at thirty-two and sell it at sixty-five, you need thirty-three years of them. No retention period is written for that, and you'll have to decide it yourself.

The two errors run in opposite directions, so there's no safe direction to be wrong in.

Forget a reinvested distribution and what you paid sits too low, so your gain looks larger than it really was, and you pay tax you don't owe. In that record, leaving out the $252 reinvestment would have you reporting about $829 instead of $767.

Forget a return of capital and what you paid sits too high, so your gain looks smaller and you pay the difference in some later year instead. Leaving out the $300 would put the same gain at about $694.

What if your holding is in US dollars?

Your return is filed in Canadian dollars, so every piece of the calculation gets converted first. That isn't one conversion. It's three, at three different dates.

What the sale brought in converts at the rate that applied the day you sold. What you paid converts at the rate from your purchase date, and a return of capital at the rate from the day it reached you.² What the sale cost you converts at the rate from the day you paid it.¹ The Bank of Canada rate for the day of each transaction is the usual one to reach for.¹

This is why a US holding can lose money in US dollars and still produce a gain on your return. If the Canadian dollar fell between your purchase and your sale, you gained on the exchange rate even though you lost on the investment. You're taxed on the Canadian-dollar result either way, so a record holding only US-dollar prices leaves you work to do at the end.

How hard this is depends on what you own

Some people have almost nothing to do here. Others have years of rows. Six things put you in one camp or the other.

Registered accounts. Money you earn inside a tax-free savings account, or TFSA, is generally free of tax, whether it came from interest, dividends or a capital gain.⁵ A registered retirement savings plan, or RRSP, a registered retirement income fund, or RRIF, a first home savings account, or FHSA, and a registered education savings plan, or RESP, all shelter what grows inside them too, and what you'll pay when money comes back out doesn't depend on which gains made it. So there's no cost base for you to keep in any of them, and if everything you hold sits in one, you're finished here. Which account you take money out of later is its own question, and The Question That Keeps Her Up is where Joanne starts working through it after thirty years of only ever paying in.

What you actually hold. One stock you bought once and never touched is a single row. A fund that pays monthly and reinvests every payment gives you twelve rows a year, and that's before you've bought or sold a thing.

More than one class of the same fund. Each class or series carries its own separate total, so two of them means two records, kept apart.²

Moving brokers. A transfer usually brings your units across and leaves your cost history behind. Neither institution can see the other's records, so once you've moved, nobody at your new broker knows what you originally paid and the figure on your statement is their best guess at it.

Who you're married to. The thirty-day rule counts what your spouse or common-law partner buys as well as what you buy.¹ Two people running two accounts can trip it, and they don't have to be trying.

Anything you put into a TFSA as an investment rather than cash. Contributing in kind counts as a sale at market value on the day you do it, so a gain on it is taxable. A loss on it you can't claim at all.⁴

None of this tells you what your own records already contain. To learn that you make a phone call to your broker and spend an evening with your old statements, and there isn't a shortcut. The rest of the capital gains picture sits alongside this one, and the tax guides cover what happens after you sell.

Spreadsheet, service, or your broker's number

Most people end up in one of three places, and the deciding factor is usually how many rows a year they generate.

Most people with one or two holdings and no reinvestment keep a spreadsheet, because a handful of rows a year doesn't justify anything more. One tab per holding, three columns, updated when a slip turns up in February or March.

Most people with several funds reinvesting every month land on a paid tracking service, because at a dozen rows per fund per year they outgrow a spreadsheet and they'd rather not maintain one.

And plenty of people just take whatever book value their broker puts on the statement. It's free, and where you've held one thing at one institution and never seen a box 42 amount, it has not had the chance to miss anything. Transfer an account in, or start collecting those amounts, and it stops matching what you'd owe. Your statement looks identical either way, so you won't find out from there.

None of this decides it for you. People generally move up from a spreadsheet when their rows outgrow the evening they're willing to spend on them, and plenty never get there at all.

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Common questions

Does my broker track my adjusted cost base for me?+

Your broker shows a book value, which is its own figure and not always the one you'll be taxed on. It can only take in what your broker knows about, so it breaks the moment you transfer an account in from somewhere else. Some adjustments never reach it at all. When a mutual fund corporation returns capital to you, nothing about it appears on your T5 slip, and you're expected to track the amount yourself.

Does selling some of my units change my cost per unit?+

No. Your total falls by the average cost of the units you sold and your unit count falls by those same units, so the cost per unit you carry forward is what it was before the sale. You'll only redo the average when you buy more, or when a distribution gets reinvested.

What is box 42 on my T3, and what do I do with it?+

It's the amount that adjusts your cost base, and the sign tells you the direction. A positive number comes off what you paid, and a negative number goes on. If enough returns of capital push your cost base below zero, the amount below zero counts as a capital gain that year even though you sold nothing, and your cost base is treated as zero from then on.

Do I need to track this inside my TFSA or RRSP?+

No. A registered account shelters what you earn inside it, so there's no cost base for you to keep and no gain to report. That covers a TFSA, an RRSP, a RRIF, an FHSA and a RESP. If every investment you own sits in one of those, none of this is your problem.

I hold the same fund at two different brokers. Is that one cost base or two?+

Neither broker can see the other's holdings, so neither statement gives you the full picture, and you're the only person in a position to keep a complete record across both. How the averaging rule applies across two institutions is worth putting to a tax professional before you sell, because the answer changes what you report.

I've never tracked any of this and I want to sell. What now?+

Start with the paperwork you've still got. Trade confirmations, old statements and past tax slips hold most of it between them, and your broker will often have more history than it puts on screen if you call and ask for it. Where a purchase leaves no trace at all, a tax professional is the right person to tell you what you can reasonably use in its place and what you need to keep to support it.

Sources

1. CRAGuide T4037, Capital Gains. Supports: the adjusted cost base being the cost of a property plus expenses to acquire it, such as commissions and legal fees; identical properties being averaged at the time of each purchase; dispositions of identical properties not affecting the ACB; the superficial loss window of 30 calendar days on either side of the sale, the inclusion of a spouse or common-law partner as an affiliated person, and the denied loss being added to the cost base of the property bought back; and the conversion of proceeds, cost base and selling expenses to Canadian dollars at the rate in effect on each of those dates, using the Bank of Canada rate for the day of the transaction. Accessed 2026-09-03.
2. CRATax treatment of mutual funds. Supports: reinvested distributions still being reported as income because you are considered to have received them before reinvesting; the cost base being purchase cost plus acquiring expenses minus returns of capital; recalculating the average cost after every purchase and every reinvested distribution, as set out in the guide's Chart 1, where a box 21 reinvested distribution is added to total cost; a separate cost base for each class or series of a fund; box 42 of the T3 subtracting when positive and adding when negative; a cost base reduced below zero becoming a capital gain that year with the cost base then treated as zero; and a mutual fund corporation's return of capital not appearing on the T5 slip, so the holder must track it. Accessed 2026-09-03.
3. CRAWhere to keep your records, for how long and how to request the permission to destroy them early. Supports the six-year retention period, measured from the end of the last tax year the records relate to. The longer horizon described alongside it follows from holding an investment for decades and is not a rule stated on this page. Accessed 2026-09-03.
4. CRATransfers of property to your TFSA. Supports an in-kind contribution being considered disposed of at fair market value at the time of the contribution, and the capital loss being unavailable where that value is less than the cost of the property. Accessed 2026-09-03.
5. CRAWhat is a TFSA. Supports income earned in a tax-free savings account through interest, dividends or capital gains being generally tax-free, including on withdrawal. Accessed 2026-09-03.

Educational, not financial advice. Figures verified against primary sources on the date shown.