ACB stands for “Adjusted Cost Base”, and is something you need to care about if you have non-registered stocks/ETFs that you buy and sell. If you don’t track your ACB, you can’t calculate the capital gains and losses for a given asset sale.
“But that’s what the T5008 is for, isn’t it?”
Theoretically, yes, but online brokers are notoriously sloppy with tracking ACB and hence your T5008 may not track capital gains properly. Some common reasons why this is are:
- You hold the same asset at multiple brokers (or even within multiple accounts at the same broker). The CRA doesn’t care where you own the asset, they only care that you own the asset. No matter how many ways and in how many accounts the asset is sliced, CRA considers there to be only one ACB for all of them.
- You move the asset from one broker to another and the ACB gets set incorrectly by the receiving broker
- Your asset is priced in USD and your broker is using a different FX rate from you1
- Your asset delivers a return of captial (RoC for short) which lowers your ACB (and increases future capital gains); your broker may or may not track this on your behalf
- Your asset reinvests dividends into the fund (this sounds the same as a DRIP, but it isn’t — it’s commonly known as a “phantom distribution”). This increases your ACB.
- Your asset undergoes a share split or share merge.
For these reasons, I don’t trust T5008s, and I track my own ACB. In Tools I Use I mention the ACB tool I use; it’s the one I have been using for many years now, namely Adjusted Cost Base. (Before that I think I used an Excel template…which I converted to ClarisWorks format, but I digress…)
I use the free version of Adjusted Cost Base because it suits my needs, and I wasn’t aware of a reasonable alternative, and I’m a cheapskate. But it seems there is one now — MyACB. I gave MyACB a quick spin this week, here’s how it compares to Adjusted Cost Base, both in “Free” mode:
| User Interface | Portfolios | Automated FX | Automated RoC and phantom distributions | Import from other sources | Pay models | |
|---|---|---|---|---|---|---|
| Adjusted Cost Base | Not pretty; subscription eliminates ads | – two; 5 with subscription | No | No, requires subscription | No, requires subscription | $49/year |
| MyACB | Pretty | – one; 5 with family subscription, 100 with “pro” subscription | Yes | For one asset only; more assets require subscription | Yes | $29/year for family $99/year for pro2 |
User Interface
Adjusted Cost Base won’t win any graphic design awards3. The design is functional but not at all modern looking. MyACB looks like a modern website. Dark mode? Check. Logical layout? Check. And at present, MyACB is ad-free4.
One big thing MyACB does better than Adjusted Cost Base is its support for editing portfolios, specifically related to deleting symbols. It’s far too easy to accidently trash an in-use symbol in Adjusted Cost Base. MyACB makes it very clear how destructive your desired action will be and asks for a specific and impossible-to-click-too-fast confirmation!
Portfolios
Tracking ACB for me means tracking it in my account, my spouse’s account, and our joint account. So that’s three portfolios. And I try to hold different assets in different portfolios to avoid raising the CRA’s ire.
Anyway, my three portfolios exceed the “free” capacity of both products; I get around the restriction by having my spouse have her own Adjusted Cost Base account to track her portfolio. Not a big deal, just a minor inconvenience. With MyACB it would be a bit trickier.
Once nice thing that MyACB does here is support for a “Group” of portfolios. This allows for a user to have multiple portfolios at multiple brokers to keep an eye on superficial losses. I wasn’t able to test this function, since MyACB is limited to one portfolio in the free version. But I can see it as being useful. (In my case, as an Adjusted Cost Base user, I just merge all my transactions across multiple accounts into one portfolio and achieve the same result. The MyACB model is cleaner and more useful).
Automated FX
Since I trade in both USD and CAD, I need to know what the CAD<->USD exchange rate is on day of settlement5. If you only hold CAD-denominated assets, then this won’t matter to you.
Here the free version of MyACB wins hands down. MyACB will do FX calculations for you by looking up the FX rate on the day of settlement. This is a something Adjusted Cost Base makes you enter manually.
Automated RoC and phantom distributions
ETFs have a habit of using these means of distributing money to their unit holders. I’m no tax accountant, but you can read all about these weird distributions over on both of the websites
- Adjusted Cost Base: Return of Capital and phantom distributions
- MyACB: Return of Capital and phantom distributions
Both tools offer support for these, no issue there. I’ve been tracking these distributions in Adjusted Cost Base for years.
MyACB adds a small teaser in the free version that allows you to automatically add these transactions for any ONE asset in your portfolio6. So if your non-registered account has one asset, this might be construed as useful. For me, and my 10 different non-registered assets, it’s merely an effort to entice me to pony up and pay for the family version of MyACB. Anyway, I tried it out and it performs as advertised, and is an exceedingly useful feature, but in the free version, it’s really just a way to kick the tires for most of us.
But compared to the free version of Adjusted Cost Base, one thing missing is support for multiple portfolios. Adjusted Cost Base’s free version supports two portfolios. I actually need three portfolios: one for my account, one for my spouse’s account, and one for our joint account. To get around that restriction, my spouse tracks her portfolio in her own Adjusted Cost Base account.
.
Import from other sources
Adjusted cost base doesn’t offer this in their free version, but it’s in the subscription version.
MyACB allows this in the free version, not too surprising, since it’s the new kid in town. The feature seems well thought out, and includes contributions from others (“schemas”) to save you time in figuring out how to map fields to MyACB.
I did try to do an export from Adjusted Cost Base to MyACB and ran into a few problems:
- The way splits are modelled in the two platforms is different. MyACB puts the split ratio in a dedicated field, whereas Adjusted Cost Base puts in two places — once in the Transaction field and once in the Shares field. A bit of Google Sheets post-processing can fix this, but this may be a problem for a user less familiar with string manipulations.
- In MyACB, the ticker symbol is mandatory, whereas in Adjusted Cost Base it isn’t.
- Adjusted Cost Base doesn’t call out the currency used, just the exchange rate, and a “yes/no” if it’s a foreign currency transaction. MyACB stores the currency “kind” (e.g. USD, EUR etc). Again, a minor difference, but one that requires some thought as to how to covert one to the other.
Am I switching?
For the moment, no. Adjusted Cost Base meets my needs, and it would require some work for me to move to MyACB. To get the most out of the switch, I would have to pony up for a family plan given the portfolio limitations in MyACB’s free version. If you’re just starting out in getting help with your ACB tracking, either tool will meet your needs. MyACB has some nice features in the free version (automatic FX lookups, transaction importing) that warrant giving it a close look.
What do you think? Let me know at comments@moneyengineer.ca!
- There’s more than one acceptable way to do this. What I do is find the Bank of Canada rate on the settlement date and use that. ↩︎
- “Tax pros” is an assumption on my part. I don’t see how even the most dedicated DIYer has a need for 100 portfolios… ↩︎
- I see that the top hat guy for Adjusted Cost Base’s logo has had a makeover; he looks a little less scary and seems to have given up cigars. ↩︎
- I do respect the need for content creators and developers to be compensated somehow for the work they do. The ads on Adjusted Cost Base are quite prominent and can be quite distracting. ↩︎
- You track your ACB in Canadian dollars, always. And you convert each transaction — buy or sell — to CAD. ↩︎
- The UI to do this is a bit (uncharacteristically) clunky, in my view — you can only import one year of transactions at a time, which gets tedious pretty quickly. ↩︎
The Money Engineer 