Section 160APE - What constitutes a class of shares

Are the taxpayer company's A, B and C class shares 'substantially the same' under section 160APE of the Income Tax Assessment Act 1936 (ITAA 1936)?

Yes. The taxpayer company's A, B and C class shares are 'substantially the same' under section 160APE of the ITAA 1936.

The taxpayer company, on incorporation, has its capital divided into shares as follows: (a) A Class shares of $1 each. (b) B Class shares of $1 each. (c) C Class shares of $1 each.

A class shareholders are entitled to one vote for each share held at any general meeting.

B and C class shareholders have no entitlement to vote at any general meeting.

A, B and C class shareholders all have rights to dividends and an entitlement to capital on winding up of the company.

The relevant provision is subsection 160APE(1) of the ITAA 1936, which reads: 'A share in a company is taken for the purpose of this Part to be the same class as another share in the company if the shares have the same, or substantially the same, rights.'

As the taxpayer company's Class A shares are substantially the same as Class B and C shares, with the only difference being that voting rights are only attached to the A class shares, section 160APE applies to treat each class of share within the company to be the same.