Invest..

When you buy a stock for ..say $1.00 in an account...say Acct.# ABC..and say 1000@$1.00......

Then the next day you buy another 1000 in the same account at $2.00..

When your account settles the system will automatically credits your account  with a total of 2000 and an average cost of $1.50.....

When you sell,if you sell the whole 2000,you would be taxed on the average price..

If you sold 1000 in two lots,you then could claim your taxation rate at the original cost..BUt you must provide Rev.can .the transaction records for those individual sales..

In both cases,the transaction records showing the cost at time of disposition must be shown..

So you can do it either way,both legal..but you must provide the paperwork for the buy/sell transaction and the dates..

What I do is when I buy or sell a stock,that has tax implications(Non registered),I start a tax file with the buy price screen print from my computer..I then keep that paper ,because it is has all the info you need for the tax man..

Then when the hard copy of the transaction comes from the bank ,I clip that to the computer print out and put that in my tax file...Then when I sell I do the same thing..so that every thing is there with that transaction for the capital gain/loss at tax time.

And if you were selling 1500 of your original transaction of your 2000 shares,you would use the average price..

Any odd number that you would sell you would use the average price..

Only the exact 1000 lots could be substanciated by original buy price of $1.00 and $2.00.....

These taxation rules do not apply inside a registered plan and capital losses are not claimable...tough tit!!

But at the same time capital gains are not taxable inside your Registered vehicle,be it an SDRRSP or SDRRIF ...but any withdrawals from either vehicle are taxable at your regular taxable income rate..

Unless your RRIF and your RRSP are self directed ,you would not be trading inside them any way(SD)..

Hope this helps..

Canadian tax rules..

Clear as mud...eh!!!