Adjusted Cost Basis (ACB) - Deferred annuities

The Adjusted Cost Basis (ACB) is the net of the principal, interest reported on tax slips less all withdrawals. Here is how the ACB is calculated:

The following increases the ACB of the policy:

  • principal at issue
  • if acquired by means of an absolute assignment (transfer of ownership) cash value at the time of an absolute assignment,
  • money deposited by the policyholder into the annuity since issue or since one of the above, and
  • taxable policy gains and accrued income previously reported to the policyholder.

The following decreases the ACB of the policy:

  • proceeds received by the policyholder (i.e. partial and/or automatic withdrawals).