A Modern Adjusted Cost Base App for Canadian DIY Investors

A Modern Adjusted Cost Base App for Canadian DIY Investors

When investing or making trades in a taxable (or non-registered) investment account, you may realize what are known as “capital gains” or “capital losses”. Basically, you made money or lost money.

In this article, I’ll share some back-to-basics adjusted cost base concepts that apply to taxable investing and more importantly thanks to this guest post, share a Modern Adjusted Cost Base App for Canadian DIY Investors.

What is Adjusted Cost Base (ACB)? Why does it matter?

Adjusted Cost Base (ACB) is the total, adjusted value of an investment or property for tax purposes, calculated as the original purchase price plus acquisition costs (commissions, fees) and capital improvements.

In short, ACB matters for taxation and income reporting purposes, to our friends at the CRA:

• if you sold something, a taxable asset for more than you paid for it, there is a (capital) gain.
• if you sold something, a taxable asset or less than you paid for it, you’ll have a (capital) loss.

Note: Capital gains do not need to be considered in registered accounts like TFSA, RRSP/RRIF, LIRA/LIF, FHSA, or an RESP. Do not worry about them. 🙂

Why does it matter?

Taxable assets that appreciate in value will be taxed.

Taxation of assets in Canada is also different – which can make things even more confusing!

Here is a quick example:

Source: RBC.

The rest of this post was written by Mitchell, a software developer who’s worked in hospitality, health, sports, and banking over the years, but personal finance has always been a passion of his – so much so, he has built a Modern Adjusted Cost Base App for Canadian DIY Investors.

Read on!

Mitchell, welcome to the site, tell us about yourself!

Thanks so much, Mark!

Yes, my name is Mitchell and yes, I’m a software developer. Personal finance and investing has been an interest since my first paycheque in middle school. On the march toward financial independence, I maxed out my registered accounts and started looking to non-registered accounts (like you did, Mark!)

That’s when I learned about Adjusted Cost Base.

At first I tracked this in spreadsheets, then in some online tools that others had mentioned. I found them dated or tedious, and some charged for features that seemed too simple to gate behind a paywall. I kept telling myself I’d build something better.

Eventually it worked its way to the top of the list and myacb.ca was born.

There’s a strong DIY investing community in Canada worth contributing to, and if MyACB makes non-registered accounts a little less intimidating for someone, or gives an existing spreadsheet tracker a second set of eyes on their numbers, that’s the whole point.

Amazing. Let’s go back to my site for a bit, how did you find me?

Over the years, I’ve dipped in and out of Canadian personal finance forums, subreddits, and blogs, often landing on posts like yours when going down rabbit holes about investing and what it actually takes to reach financial independence in Canada.

A few of your pieces have really stuck with me and quietly shaped how I think about my own financial independence journey. Today I’m not lurking but sharing something I built with the community and your site is a great home for that…

Love it. Congrats on your financial independence too. OK, in your own words, why does ACB matter?

If you invest in a non-registered account in Canada, Adjusted Cost Base (ACB) is how the CRA determines your capital gain or loss when you sell – what you wrote above.

The idea is simple: ACB is the average cost of your shares.

Example, just using XEQT for a quick example (not a recommendation by myself or Mark):

Buy 100 shares of XEQT at $20, then 100 more at $22. Total cost: $4,200 across 200 shares, so your ACB is $21.00 per unit. Sell all 200 at $25 and your capital gain is ($25 – $21) × 200 = $800. With a 50% inclusion rate, $400 gets added to your income for the year and taxed at your marginal rate. Easy enough, right?

The complication is that buying and selling aren’t the only things that affect your ACB. Several other events affect it, many of them invisible in your brokerage account, but all of them are your responsibility to track.

With the rise of ETFs in most Canadians’ investment portfolios, this isn’t something you can ignore. These funds issue distributions every year and within those distributions, two components directly affect your ACB: return of capital reduces it, and reinvested capital gains (often called phantom distributions) increase it. Your broker will issue T3 slips that show your total distributions, but your book value on your brokerage statement almost certainly doesn’t reflect the ACB impact of these components. Hold any given ETF for a few years without applying these adjustments and your ACB drifts. Overstating your ACB means you underpay the CRA and risk reassessment. Understating it means you overpay.

The identical property rule adds another layer. The CRA requires you to pool all shares of the same security across every non-registered account you hold. Hold XEQT at both Questrade and Wealthsimple? Those go into the same ACB pool. Of course, neither broker can see the other’s records, so neither one could even attempt to do this correctly for you.

Then there’s the superficial loss rule: sell a security at a loss and repurchase within 30 days and the CRA denies that capital loss. It doesn’t disappear though, it gets added to the ACB of the repurchased shares. Miss it and you’re either overclaiming losses or understating future gains.

So, it can be complex. 

So where does MyACB come in? There are other tools and spreadsheets you can use or build on your own to do this?

You’re right. 

Tracking your ACB correctly isn’t conceptually difficult but it sure can be tedious and error-prone to enter manually and build things on your own.

I built MyACB to make it fast and simple, with the Canadian DIY investor in mind. The goal from day one was to aim for a feature-rich free tier that handles the real complexity, not just the easy parts.

Here are some great features your DIY readers should know about:

1. Import your transaction history in minutes. Unlike other tools, you can upload your brokerage’s transaction CSV export and the import wizard walks you through mapping the columns. There’s a community-submitted marketplace of mappings for common Canadian brokerages. If yours is already in the marketplace, apply it and your transactions are imported within seconds.

I even have a video for extra support for that and other items if you need it as part of my YouTube channel:

2. There is an automatic exchange rate lookup. For non-CAD transactions, MyACB fills in the Bank of Canada rate for each transaction date. One less thing to look up!

3. Tax factor sync. Every year, fund companies publish per-unit return of capital and reinvested capital gains figures. MyACB can add these adjustments in your portfolio automatically. No hunting through fund company PDFs or cross-referencing T3 slips. For most ETF investors, this is what keeps their ACB accurate year over year. The free tier I have for DIY investors includes one security; Pro unlocks our full library. (So, I have a feature-rich free tier, perfect for do-it-yourselfers and r/JustBuyXEQT investors. Our premium features include additional portfolios, unlimited tax factor syncs, tax prep (Schedule 3), and priority support.)

4. Superficial loss detection. MyACB detects the 30-day repurchase pattern and can handle both the denied loss and the ACB adjustment on the repurchased shares. 

5. Export your data. From MyACB, you can export your data at any time!

You can see a full list of features here.

I would be happy to answer any questions from any of your readers, anytime!

A Modern Adjusted Cost Base App for Canadian DIY Investors

To Mark’s readership, I want to thank Mark for this guest post and the opportunity to promote my ACB tool. 

If you’re reading My Own Advisor, you’re already doing the work to take control of your finances. I read it too!

And while Mark has discussed ABC and taxation considerations related to his dividend paying stocks on this site in the past, detailed ACB tracking is the part of taxable investing that really nobody talks about, but it comes with the territory with any taxable investing, and the CRA isn’t forgiving about it if you get it wrong!

MyACB exists to take that off your plate so you can focus on the part that actually matters. Start free, and see if it works for you and again, reach out to me if you have any questions.

Thanks for Mark and his site.

How to get started with MyACB?

Easy. Create a free account.

All readers of My Own Advisor can use promo code MYOWNADVISOR at checkout for 20% off any paid plan. There’s a 7-day no questions asked refund window if the upgraded tool isn’t what you were looking for.

If you have any questions or feedback, you can reach me directly at mitchell@myacb.ca

Disclosure: This is a guest post from Mitchell at MyACB. A nominal commission may be provided to My Own Advisor if you sign up using the promo code above. There is never an obligation to use MyACB. Rather, MyACB is a tool to help you organize and track your ACB, but it is not tax advice. Always consult a qualified tax professional for your specific situation.