The scrip-for-scrip rollover is a CGT deferral provision under Subdivision 124-M of the Income Tax Assessment Act 1997 (Cth) that allows a seller receiving shares (rather than cash) in exchange for shares in the target to defer the capital gain on the exchange until the rollover shares are ultimately sold. The rollover is commonly used to make rollover equity tax-effective for the founder.
Eligibility is fact-specific and depends on the structure of the acquiring entity, the proportion of consideration received as scrip, and other technical requirements. Specialist tax advice should be obtained before agreeing to any rollover equity structure that relies on scrip-for-scrip relief.