1. FAQs
  2. Corporate Actions

Merger

A merger occurs when two existing companies combine into one new company or when one company acquires another.

When a merger occurs the original stock will cease to exist. According to the ATO, the capital proceeds for the original shares are the total of the market value of the new shares received at the time of the takeover, and the money received (if any). The cost of acquiring the shares in the takeover or merged company is the market value of original shares at the time the other shares are acquired, reduced by any cash proceeds.

How does it affect my account?

You will cease to hold a specific stock and be issued with a different stock or with cash.

Tax Implications:

If a company in which you owned shares was taken over and you received new shares in exchange for your original shares, you may be entitled to a scrip-for-scrip rollover. The rollover allows you to defer paying CGT until a later CGT event happens (for example if you later dispose of the shares you acquired in the takeover). The rollover doesn't apply if you made a capital loss. For the purpose of tax reporting we report all mergers as capital gain events and leave it to the discretion of the shareholder to determine if they are eligible for scrip-for-scrip rollover.