What is the total cost base?

The basis of the total cost is the amount of money that must be paid for securing and maintaining a specific investment. This amount is essential for investors at the time of tax, because it determines how much they have to pay tax on capital income from their investment. The calculation of the total cost requires the addition of the purchase price of the security, any dividends paid to the investor and any commission paid to the brokers for safety actions. Once it is done, this amount is deducted from any profits achieved when the shares are sold in order to determine the above capital profits that are taxable, obtained by a specific investment. At the same time, all these profits are a taxable income. For this reason, investors must understand how much tax officials must report in terms of capital profits obtained from investments. This requires an understanding of the concept of total costs.

In principle, the total is the totalThe amount of cargo, which was paid for certainty, along with any other fees that will join it. These fees include all commission fees paid to brokers for assistance in making orders related to security. Any dividends paid for stocks would also be included because they have already been included as a taxable income if originally provided by an institution issuing security.

As an example of how it works, imagine that the investor has bought shares for $ 500 (USD). The price of the commission paid to the stock broker for this event was $ 50. After a year, the investor sold shares and paid the brokers for the brokers to provoke it. During the year he received one dividend payment of $ 100. In the thirty S, the total cost base is $ 500 Plus 50 USD plus $ 50 USD Plus $ 100 or $ 700.

This amount is then against the sales price of security when the investor calculates its capital profits. Imagine that an investor from the aboveHe received the example of $ 800 from the sale of shares. Its capital profits for the investment would be $ 100, which is the difference between the sales price of $ 800 and the total price of $ 700. Capital gains of $ 100 are taxable income that must be reported.