Scrips in Australia 2025: What Investors Need to Know

In 2025, ‘scrips’—share-based payment instruments—are carving out a powerful niche in Australian finance. Whether you’re a retail investor, a business owner, or someone watching the M&A (mergers and acquisitions) space, understanding scrips is more important than ever. As the rules of corporate transactions evolve, so too do the strategies for maximising value and minimising tax headaches.

What Are Scrips and How Do They Work?

Scrips are shares issued as payment instead of cash, often used in company mergers, acquisitions, or dividend reinvestment plans. If you’ve ever received new shares instead of a cash dividend or seen a takeover bid where shareholders are offered shares in the acquirer, you’ve encountered scrips in action.

• Scrip Dividends: Companies may offer shareholders the choice between a cash dividend or additional shares.

• Scrip-for-Scrip Takeovers: In M&A, the acquiring company issues its own shares to buy out the target firm’s shareholders.

• Bonus Share Issues: Companies issue extra shares to existing holders, sometimes as an alternative to cash payouts.

This approach can conserve cash for the issuing company, and for investors, it offers a way to increase holdings without an out-of-pocket cost.

Why Scrips Are Booming in 2025

Several 2025 trends are fueling the rise of scrip-based deals in Australia:

• High Interest Rates: As the RBA continues to keep rates higher to manage inflation, companies are preserving cash and opting for share-based deals.

• Market Volatility: With the ASX experiencing swings, scrips provide a way for investors to maintain exposure to growth stories without liquidating assets.

• Tax Deferral Opportunities: Recent ATO guidance has clarified the conditions under which scrip-for-scrip rollover relief applies, allowing investors to defer capital gains tax (CGT) when exchanging shares in a takeover.

For example, in the recent 2025 acquisition of TechMinerals Ltd by GreenFuture Energy, shareholders were offered 0.8 GreenFuture shares for every TechMinerals share held. Many took this option to avoid triggering immediate CGT, banking on future growth instead.

Tax Implications and Policy Updates

The ATO’s 2025 update to scrip-for-scrip rollover relief has made these transactions more attractive. Here’s what’s changed and what you need to watch:

• Eligibility Expanded: The new rules allow broader eligibility for scrip-for-scrip rollover relief, including more classes of shares and certain cross-border transactions.

• CGT Deferral: If you receive shares instead of cash in a qualifying takeover, you can defer paying CGT on the capital gain until you dispose of the new shares.

• Dividend Imputation: For scrip dividends, franking credits may still apply, but eligibility depends on specific holding periods and the company’s tax position.

It’s essential to check the fine print: not all scrip deals qualify for rollover relief, and partial cash/scrip offers can complicate your tax reporting.

Real-World Examples and Considerations

2025 has already seen several high-profile scrip deals:

• Tech Sector Consolidation: Startups merging to survive in a competitive landscape often use scrip to preserve cash and align shareholder interests.

• Banking Mergers: The proposed merger of two mid-tier banks offered scrip-only consideration, with both boards arguing it would create a stronger, unified entity without draining reserves.

For individual investors, accepting scrip can be a double-edged sword. If the new company performs well, you benefit from growth. If not, your portfolio may become overweight in a single stock, or you may face liquidity challenges if the shares aren’t easily traded. Always review the offer documents and consider your own diversification needs.

Conclusion

Scrips are no longer a niche financial instrument—they’re a mainstream tool for companies and investors navigating the complexities of 2025. Understanding how scrips work, their tax implications, and the market context can help you make smarter decisions, whether you’re accepting a takeover offer or reinvesting dividends. Stay informed and be proactive: the next scrip deal could be your opportunity to build wealth, tax-effectively.