Treasury has released for consultation draft legislation that makes it easier for takeovers and mergers regulated by the Corporations Act 2001 to qualify for capital gains tax (CGT) scrip for scrip rollover.

The scrip for scrip rollover enables taxpayers to defer realising capital gains from exchanging shares in one company for shares in another as part of a merger or takeover. Similar relief is also available for the exchange of trust interests.

It is a requirement of the scrip for scrip rollover that members in the target entity have the ability to participate in the arrangement on substantially the same terms.

This measure applies to CGT events that happen from 6 January 2010, the day the Assistant Treasurer announced the Government’s intention to introduce the legislation.