Cost of improvement rules limit eligible capital expenditures for investment assets and specify nil exceptions and exclusions.

Cost of improvement for an investment asset comprises capital expenditures on additions or alterations by the person or, where acquired by a special mode, by the previous owner; for assets owned before 1 April 2000 only expenditures incurred on or after that date qualify. The cost of improvement is nil for self-generated assets, slump sale transfers of undertakings or divisions, and where cost cannot be determined, and expenditures deductible under any other head of income are excluded from the cost of improvement.

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