If the brokerage has reported an ACB in box 20, you can assume it is correct. If the investor does not own the stocks/mutual funds through a brokerage (just hold on his own), then he/she is responsible for knowing the ACB of the investment. ACB is cost of initial purchase, less any required adjustments to the ACB. Box 42 on the T3 is one such adjustment. It represents a "return of capital" amount that was received by the investor. The distribution made by a mutual fund or trust (who have to report on a T3 slip) can be made up of a variety of types of income - dividends, investment income, foreign business income, return of capital are the most common. The return of capital amount Box 42) is not taxable - it instead reduces the ACB of the investment, which increases the subsequent capital gain upon eventual disposition.
