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Where a 'relevant CGT asset' (as defined in paragraph 170-275(1)(a) of the Income Tax Assessment Act 1997 (ITAA 1997)) is technologically redundant, can it also be taken that it 'ceases to exist' for the purposes of paragraph 170-275(1)(a) of the ITAA 1997?

No. A CGT asset that is still physically in existence but placed in storage by the owner does not cease to exist notwithstanding the fact that it may no longer be used as it has become technologically redundant.

An 'originating company' (as defined in paragraph 170-255(1)(a) of the ITAA 1997) disposed of a CGT asset to another entity.

The disposal of the CGT asset resulted in section 170-255 of the ITAA 1997 applying. As a consequence, a capital loss that the originating company would otherwise have been entitled to was disregarded under section 170-270 of the ITAA 1997.

Subsequently, the relevant CGT asset acquired by the other entity was considered to be technologically redundant, but kept in storage for emergencies.

Where a capital loss has been disregarded under section 170-270 of the ITAA 1997, the originating company is taken to have made an equivalent capital loss where a 'new event' happens under section 170-275 of the ITAA 1997.

Paragraph 170-275(1)(a) of the ITAA 1997 provides that a new event happens where the relevant CGT asset 'ceases to exist'.

The term 'ceases to exist' is not defined in the ITAA 1997 and must be interpreted having regard to the ordinary meaning of that term in the context of Subdivision 170-D of the ITAA 1997.

A CGT asset that is still physically in existence but placed in storage by the owner, does not cease to exist, notwithstanding the fact that it may be technologically redundant.

Note: The term 'ceases to exist' in paragraph 170-280(3)(a) of the ITAA 1997 is to be interpreted consistently with the interpretation used in applying paragraph 170-275(1)(a) of the ITAA 1997 given in this ATO Interpretative Decision.