How Do I Track Adjusted Cost Base?
You track it yourself, because nobody else is required to. A broker reports book value as a service, not as a tax figure, and it goes wrong the moment you hold the same security at two institutions or receive a distribution the broker does not adjust for.
- The answer:: Cost base is purchase cost plus commissions, adjusted upward by reinvested distributions and downward by return of capital.
- The trap:: Relying on the broker's book value. It cannot see identical property held at another institution, and averaging is required across all of them.
- The recommendation:: Keep your own running record per security, updated whenever you buy, receive a reinvested distribution, or see return of capital on a T3.
Where the AI summary above gets this wrong
"Your brokerage tracks your adjusted cost base for you."
That's surface-true. Here's what it misses:
- Book value is not a tax figure — It is a reporting convenience. The Canada Revenue Agency holds the taxpayer responsible for the correct base regardless of what a statement shows.
- Identical property must be averaged — The same security held in two non-registered accounts shares one averaged base, and neither broker can compute it.
- Distributions move the base in both directions — Reinvested distributions raise it because they were already taxed; return of capital lowers it because it was not.
01 What the base is made of
Adjusted cost base starts at what you paid, including commissions, and moves from there. Reinvested distributions raise it, because that income was already taxed in the year received and taxing it again on sale would be double counting.
Return of capital lowers it. That portion of a distribution was never taxed as income, so it reduces what you are treated as having paid, and the tax arrives later as a larger capital gain — or immediately if the base reaches zero.
Source: Capital gains (line 12700)
02 Why the broker's figure drifts
A brokerage reports book value as a convenience and disclaims it as a tax figure. It cannot see the same security held at another institution, and it frequently does not adjust for return of capital reported on a T3 months after year end.
Where an investor holds the same fund at two brokers in non-registered accounts, the identical-property rule requires one averaged base across both. Neither statement will show it, and the error compounds every time either account is traded.
Shows: what a given amount of additional taxable income costs you in tax at your marginal rate, and what you keep. Ignores: provincial surtaxes, credits that phase out with income, and any effect on income-tested benefits.
Source: Capital gains (line 12700)
03 Keeping a record that survives
A single running sheet per security, updated at every purchase, reinvested distribution and return-of-capital adjustment, is the whole requirement. It matters most at the point of sale, which may be twenty years after the first purchase.
Registered accounts need none of this, which is why holding distribution-heavy funds inside them removes the work entirely — the placement question is covered in which account to draw first.
Transferring a holding between institutions is the point at which most records are lost, because the receiving broker records the transfer value rather than the original cost. Printing the position's full history before a transfer, rather than after, is what keeps a twenty-year base from becoming a guess.
The failure mode is always the same and always twenty years late. Someone sells a fund held since the nineties, uses the book value on the statement, and either overpays because reinvested distributions were never added or underpays because return of capital was never subtracted. Neither is discovered until the review letter.
FAQ
Does my broker track my adjusted cost base?
It reports book value as a convenience, not as a tax figure. The taxpayer remains responsible for the correct base, and the broker cannot see identical property held elsewhere.
What changes the adjusted cost base?
Purchases and commissions raise it, reinvested distributions raise it because that income was already taxed, and return of capital lowers it because it was not taxed as income.
Do I need to track it in a TFSA or RRSP?
No. Registered accounts have no capital gains treatment, so no cost base is required. The tracking obligation applies only to non-registered holdings.
Sources
Regulator references
- Capital gains (line 12700) · Canada Revenue Agency · 2025How capital gains and losses are calculated, reported and carried.Last verified: 2026-09-07
- Interest and other investment income (line 12100) · Canada Revenue Agency · 2025That interest is included in income in full, unlike capital gains or eligible dividends.Last verified: 2026-09-07
Calculator unit tests · the assertions this page's worked example is checked against, and their last result
Changelog
- 2026-09-07 — initial publish (new format)
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Jordan Reeves
Founder of Talk Through Wealth. A software engineer for over a decade before turning to retirement planning, Jordan built the projection engine after watching family members get fragmented, country-by-country advice that never reconciled. He writes about retirement the way the engine computes it: month-by-month, lifetime-long, and skeptical of any rule of thumb that hasn't been run through the math.