Capital gains are profits on an investment. When you sell investments at a higher price than what you paid for them, the capital gains are “realized” and you’ll owe taxes on the amount of the profit (hence the commonly used expression \u201crealized gains<\/a>\u201d). On the other side of the spectrum, a realized loss<\/a> occurs when an asset which was purchased at a level referred to \u201cas cost\u201d or book value is then disbursed for a value below its book value.<\/p>\n In Canada<\/a>, 50% of the value of any capital gains are taxable. If you have realized capital gains, you\u2019ll need to add 50% of the capital gain to your income. Basically, this means the amount of additional tax you actually pay will vary depending on how much you\u2019re making and what other sources of income you possess. If you have both capital gains and capital losses, you can offset the capital gains with capital losses until you reach a zero amount. If you only have capital losses, the CRA enables you to use the capital loss to offset a capital gain you originally declared in the previous 3 years, or you are allowed to carry forward the capital loss into the future.<\/p>\n Figuring out and tracking how much of your sale amount was made up of taxable earnings can be difficult; fortunately Wealthica can help.<\/p>\n The Benefits of Adjusted Cost Base (ACB)<\/strong><\/p>\n Wealthica\u2019s realized gains reporting uses the Adjusted Cost Base calculation method which is often simply referred to as \u201cACB\u201d. It\u2019s important to note that the Canada Revenue Agency (CRA) requires<\/a> investors to use ACB when determining capital gains or losses for income tax purposes on Schedule 3. Also the ACB only matters<\/a> for non-registered investments; when it comes to registered accounts it’s irrelevant because there are no capital gains taxes applied on such.<\/p>\n ACB is computed<\/a> in the following manner: all of the costs related to the purchase of investments, including bonds, stocks, and mutual funds are factored in. Such also includes commissions and fees resulting from the purchase of assets, with the total overall cost divided by the shares of the asset. The adjusted cost base has to be recalculated as more shares are acquired or sold, including the associated transaction fees.<\/p>\n![\"Realized](\"https:\/\/wealthica.com\/blog\/wp-content\/uploads\/2019\/04\/realized-gains-full-screenshot-659x1024.png\")
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