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How to calculate cost base per share

by Stephanie Stefanovic, Content Manager, Sharesight | Nov 30th 2021

The cost base of an investment is one of the key metrics an investor needs to know when preparing their tax return. While it is possible to manually calculate the cost base of your investments, this quickly becomes tedious and subject to error, especially for large portfolios with a lot of trades and dividend-paying stocks. To learn more about cost base per share, how it’s calculated and how you can automatically track it using Sharesight, keep reading.

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. It is important to know the cost base (and capital gain) of your stocks, especially if you have sold shares, as this can have tax implications. The cost base per share is simply an investment’s cost base divided by the number of shares.

There are different ways to calculate cost base per share depending on the corporate action involved. To calculate cost base per share for a company that has undergone a stock split, consider the following 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.

This is just one example, however in most cases you will need to undertake further calculations if you want to adjust your cost base for dividends and distributions or for additional share parcel purchases or sales, for instance. If you have a large portfolio or a lot of dividend-paying stocks, this can become tedious and subject to error.

With Sharesight, the cost base of your investments is automatically tracked and updated as corporate actions and trades occur. To find the cost base of an investment, simply click into the relevant holding in your portfolio and open the ‘Holding Information’ tab. Here you can view the investment’s current value, quantity of shares, cost base and cost base per share.

Sharesight cost base per share

An example of cost base information for a European stock in a UK portfolio. The value is shown in British Pounds and Euros, while cost base is shown in the currency of the portfolio’s Tax Residency.

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