Q: I owned shares in Arena Minerals, which was bought out by lithium Americas. What is my cost base for my LAC shares based on a purchase price of .276 per Arena share. How do I determine that? On my new statement showing the LAC shares the cost base shows as zero. I’ve never been involved in a buyout before. Thanks for the help as always.
5i Research Answer:
In a Canadian share for share takeover, capital gains can be deferred by making a specific tax election. With the deal only just closed, there is lots of time for this. The cost base is the same as the initial purchase price, on a dollar basis. To get the per share ACB of the acquired LAC shares, simply divide the total cost base of AN by the total number of LAC shares now owned. Brokers may adjust ACB but it is always advisable NOT to rely on brokers' cost basis. We have seen many errors over the years, especially with mergers/takeovers.