How Are Capital Gains Calculated? Adjusted Cost Base (ACB) Explained

How to work out the ACB when you buy the same shares several times, exchange shares or trade in foreign currency

Scott Tang, CPAUpdated 2026-11-052026 rules4 min read

If you bought the same shares several times at different prices, what is your cost when you sell some of them? For identical properties (shares of the same class of the same company, or units of the same fund), Canada uses the average cost. This average is called the adjusted cost base (ACB). When you sell: capital gain = selling price − ACB of the part sold − selling costs.

Average cost

The same shares in all your regular (non-registered) accounts are combined and calculated at average cost

Commissions included

Commissions on purchases are added to your cost; commissions on sales are deducted from the selling price

Canadian dollars

For purchases and sales in a foreign currency, convert each trade to Canadian dollars at that day's exchange rate

Broker figures are a guide

If you've moved brokerages or have several accounts, the cost shown by the broker is often wrong

An example

1
Buy 100 shares
$15 a share, total cost $1,500, ACB $15.00
2
Buy 150 more
$3,000 in total; you hold 250 shares, total cost $4,500, ACB $18.00
3
Sell 200 shares
Cost 200 × $18 = $3,600; 50 shares left, ACB still $18.00
4
Buy 350 more
$21 a share, $7,350 in total; you hold 400 shares, total cost $8,250, ACB $20.63

Selling doesn't change the per-share ACB of the shares you still hold — only purchases and the events below change it.

What changes your ACB

Event	Increases ACB	Reduces ACB	Total cost unchanged
Buying more (including commissions)	✓	—	—
Dividend reinvestment (DRIP)	✓The amount reinvested	—	—
Reinvested fund distributions (year-end "phantom" distributions)	✓Check the reinvested amount against the fund's tax breakdown and the T3; don't add all the T3 capital gains a second time	—	—
Return of capital (ROC, common with funds)	—	✓The return of capital shown on the T3	—
Share splits and consolidations	—	—	✓The per-share ACB changes with the number of shares
Share exchanges in a reorganization of the same company	—	—	◐In many cases the original cost can carry over, depending on the specific arrangement

Buying more (including commissions)

⬆️ Increases ACB: ✓
⬇️ Reduces ACB: —
↔️ Total cost unchanged: —

Dividend reinvestment (DRIP)

⬆️ Increases ACB: ✓The amount reinvested
⬇️ Reduces ACB: —
↔️ Total cost unchanged: —

Reinvested fund distributions (year-end "phantom" distributions)

⬆️ Increases ACB: ✓Check the reinvested amount against the fund's tax breakdown and the T3; don't add all the T3 capital gains a second time
⬇️ Reduces ACB: —
↔️ Total cost unchanged: —

Return of capital (ROC, common with funds)

⬆️ Increases ACB: —
⬇️ Reduces ACB: ✓The return of capital shown on the T3
↔️ Total cost unchanged: —

Share splits and consolidations

⬆️ Increases ACB: —
⬇️ Reduces ACB: —
↔️ Total cost unchanged: ✓The per-share ACB changes with the number of shares

Share exchanges in a reorganization of the same company

⬆️ Increases ACB: —
⬇️ Reduces ACB: —
↔️ Total cost unchanged: ◐In many cases the original cost can carry over, depending on the specific arrangement

If return of capital reduces your ACB below zero, the negative amount has to be reported as a capital gain in that year, and your ACB starts again from zero.

Foreign currency and newcomers

Shares in a foreign currency

Convert each purchase to Canadian dollars at that day's rate

Total cost in Canadian dollars ÷ total number of shares

Convert sales at that day's rate too

Even if the share price hasn't moved, a change in the exchange rate can create a gain or a loss

Shares you owned before landing

The day you become a Canadian resident

Deemed to be reacquired at that day's market value

That market value becomes your ACB

Canada doesn't tax the increase from before you landed

Points to watch

Combine multiple accounts
If you hold the same shares in non-registered accounts at two brokerages (including a foreign brokerage), combine them to work out a single average cost.
Registered accounts are separate
The same shares held in a TFSA or RRSP are not included in the average cost for your non-registered accounts.
Keep your own record
Start from your very first trade and include DRIPs, fund distributions and ROC; it makes filing your returns, and answering any CRA questions, much easier.
Selling at a loss and buying back
If you buy identical property within 30 days before or after the sale and still hold it at the end of the 30th day after the sale, all or part of the loss may be a "superficial loss". Whether the denied loss can be added to your cost depends on the type of account; see "Can Investment Losses Reduce Your Tax? Capital Losses and the Superficial Loss Rule" in this series.

How Sheng Qian CPA can help

Rebuilding your cost
From your trade records and your T3 and T5008 slips, we rebuild the ACB of each holding, including those at foreign brokerages.
A landing cost record for newcomers
For holdings you owned before landing, we set up the cost using their market value and the exchange rate on the day you landed.
Run the numbers before you sell
Before a large sale, we work out the gain and the tax first, and then you decide on the timing; for prices, see "What Sheng Qian CPA Can Do for Investors: Tax Returns, Accounts and Annual Planning" in this series.

Sources

CRA: Special rules and other transactions (identical properties) · Capital gains (T4037)

Disclaimer

This article is general information only and is not tax or investment advice. Everyone's situation is different; please consult a CPA about your specific arrangements. Service fees are as set out in our written quote.