The adjusted cost base (ACB) of a property is its cost to the taxpayer for the purpose of computing a capital gain or loss on disposition. It generally starts with the acquisition cost and is then adjusted up or down over the holding period for items the Income Tax Act specifies.
For shares, the ACB increases for amounts paid on subscription and certain capital contributions, and decreases for returns of capital and certain rollover-related reductions. The ACB at the time of disposition determines the gain or loss realized. It is also central to estate freezes, section 85 rollovers, post-mortem pipelines, and the surplus-stripping rules, where the cost base of shares drives the tax outcome.