Reading 2021-12-28

Metadata

• Ref:: Sharesight
• Title:: How to calculate cost base per share
• Author:: Stephanie Stefanovic
• Year of publication:: 2021
• Category: Blog
• Topic:: #topic.investment

Notes from reading

The cost base of an investment is one of the key metrics an investor needs to know when preparing their tax return

The cost base of an investment is its original value for tax purposes – typically the value of the purchase price adjusted for corporate actions such as stock splits, dividends and return of capital distributions. It can also include any fees that were involved in the purchase

Cost base is used to determine an investment’s capital gain, which is calculated based on the difference between the investment’s cost base and the current market value

The cost base per share is simply an investment’s cost base divided by the number of shares

Example: You hold 500 shares in the company, which were purchased at a price of $10/share. The company undergoes a 2:1 stock split. To figure out your cost base per share, you will need to divide the original value of the investment ($5,000) by the new number of shares you hold post-split (1,000) to get a value of $5, compared to your previous cost base per share of $10. You could also divide your original cost base per share ($10) by the split factor of 2:1, which would give you the same result.