Adjusted Cost Base (ACB)

A calculation used to determine the cost of an investment for tax purposes factoring in added costs and benefits, such as purchases after the initial purchase, dividend re-investment, and return of capital, stock splits, spin-offs and consolidations. (The ACB of a life insurance policy is calculated differently, based on numerous factors. The ACB will normally increase in the premium-paying years and then gradually reduce to zero. If needed, request the information from the company, broker or agent.)