The adjusted cost base is the tax cost of a capital property, its original purchase price plus acquisition costs and certain adjustments, used to calculate a capital gain or loss on sale.
When you sell a capital property, shares, real estate, a business, your gain or loss is the proceeds minus the adjusted cost base. The ACB starts with what you paid, plus commissions, legal fees and improvements, and is adjusted over time for events like return of capital, reinvested distributions and partnership allocations.
Keeping an accurate ACB is essential and often overlooked, especially for investments held for years or bought in multiple lots. An understated ACB means you overpay tax on a capital gain; an overstated one invites reassessment. For identical properties bought at different prices, the ACB is the weighted average of all units held.
You buy 100 shares at $20 ($2,000) and later 100 more at $30 ($3,000). Your total ACB is $5,000 for 200 shares, an average of $25 each. Selling 100 shares uses a $25 ACB, not the price of any single lot.
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Property tax is an annual municipal levy on real estate, charged by the city or town where the property sits rather than by the CRA. The bill is the assessed value of the property multiplied by the tax rate the municipality sets each year, and it funds local services such as roads, waste collection, policing and the education portion the province adds. Assessed value is set by a provincial assessment authority, so it is not the price you paid.
Your marginal tax rate is the rate on your next dollar of income, not on your income as a whole. Federally for 2026 that is 14%, 20.5%, 26%, 29% or 33% depending on the bracket you have reached, and your province's rate stacks on top, so an Ontario earner in the 26% federal band adds the Ontario rate for their own band. The two sets of thresholds rarely line up, so add the two rates together.
CIT stands for corporate income tax, the tax a corporation pays on its own profits and reports on a T2 return rather than a personal return. For 2026 a Canadian-controlled private corporation claiming the small business deduction pays a federal rate of 9% on the first $500,000 of active business income, with the federal general net rate at 15%, and a provincial rate applies on top. The T2 return is due six months after the fiscal year end, but the tax itself is due earlier: two months after year end, or three months for a Canadian-controlled private corporation that claims the small business deduction and meets the other conditions.
Canada taxes personal income in bands. Each bracket's rate applies only to the income inside that band, so earning your way into a higher bracket never re-taxes the income below it. Federal thresholds are indexed to inflation annually, and your province or territory applies its own set of brackets on top, which together give your combined marginal rate. Because the figures move every year, use the CRA rate table for the tax year you are filing rather than the current one.
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Ex Big 4 — Ernst & Young, Deloitte · International & cross-border tax specialist · CPA Canada (In-Depth Tax Program) · Chartered accountant, ICAI & MIA
Udit Gupta has over 15 years of experience helping corporations and business owners with corporate structuring, corporate tax filing, bookkeeping, payroll, GST/HST, cross-border tax and CRA representation. Big 4 trained at Ernst & Young and Deloitte, and qualified as a chartered accountant in India and again in Malaysia, he founded his accounting practice in 2014 to serve entrepreneurs, startups and non-resident business owners across Canada. View full member bio.
The Institute of Chartered Accountants of India — member 521458 · Malaysian Institute of Accountants — member CA 44667 · Ex Big 4: Ernst & Young, Deloitte · CPA Canada (In-Depth Tax Program), completed 19 Dec 2023 · In-Depth GST/HST Part I, 12 Jul 2022 · Part II, 5 Jul 2023
Editorial policy. Every page is researched against primary sources — the Income Tax Act, CRA publications and CPA Canada guidance — and every rate or threshold is stated with the tax year it applies to.
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