What is adjusted cost base (ACB)?
In one line: Adjusted cost base (ACB) is what your shares cost you for Canadian tax: the price paid plus fees, then changed by things like assigned put premiums and returns of capital.
How it works
Your adjusted cost base (ACB) is the number you subtract from the sale price to get your capital gain or loss in Canada. It's the Canadian name for Cost basis.
It starts with what you paid. Then it moves:
- Fees add to it. A commission on the buy is part of the cost.
- Buys average together. Shares of the same company across all your regular (non-registered) accounts are pooled. TFSA and RRSP shares stay out of it. Your ACB per share is the total cost divided by the total shares.
- An assigned put lowers it. If a put you sold is assigned, the premium you kept comes off the cost of those shares.
- A return of capital lowers it. Some funds pay part of a payout back as your own money.
- Reinvested payouts raise it. Shares bought with a dividend add their cost.
- A denied loss raises it. A Superficial loss usually gets added to the shares you bought back.
A called-away covered call works the other way. The premium is added to your sale proceeds, not taken off the ACB.
For US stocks, each amount is converted to Canadian dollars, generally at the rate on the day of the trade. As of October 2026, the CRA explains ACB on canada.ca; check it there the year you file.
An example (hypothetical)
All numbers are made up, in Canadian dollars, in a regular account.
| Step | Shares | Total cost | ACB per share |
|---|---|---|---|
| Buy 100 XYZ at $50, $10 fee | 100 | $5,010 | $50.10 |
| A $40 put is assigned; you kept a $100 premium | 200 | $5,010 + $4,000 − $100 = $8,910 | $44.55 |
| Sell 100 shares at $38 | 100 left | $4,455 left | $44.55 |
| Capital loss on the 100 sold | $3,800 − $4,455 | −$655 |
Notice two things. The second buy pulled the per-share cost down for all 200 shares. And the put premium shrank the loss, but didn't stop it.
Why it matters for sellers
The wheel strategy changes your ACB at almost every step. A put is assigned. A call is sold. Shares are called away. Miss one premium and your gain or loss is wrong on your return.
Your broker's slips may not track it for you, especially across two accounts or after an assignment. So keep your own:
- Every buy and sell, with fees, in Canadian dollars.
- Every assigned put premium, against the shares it bought.
- Every called-away premium, added to that sale.
Step-by-step through a full cycle: ACB after assignment, a worked example. The wider picture: selling options in Canada.
Questions
Is ACB the same as cost basis?
Mostly. ACB is the Canadian tax term. The big difference is that Canada averages your cost across all your shares of one company in your regular accounts, instead of tracking each lot.
Does a covered call premium change my ACB?
Not if the shares are called away. Then the premium is added to your sale proceeds. If the call expires, the premium is usually a capital gain on its own.
What if my ACB goes below zero?
It can happen after large returns of capital. The amount below zero is generally treated as a capital gain that year, and the ACB resets to zero.
The Options Wheel System · for StructureX members
Learn the whole wheel, step by step. Use it for life.
44 plain-English modules take you from zero to running the wheel: covered calls, cash-secured puts, assignment, rolling, the math and the risk rules. A scored quiz after every part. Members of StructureX Foundations, my 50-lesson course, add it in one click, with the AI Research Desk.
See What’s Inside the Course $34.99 a month · Cancel anytimeFollow along