Income tax: must dividends paid in respect of different classes of shares be franked at the same rate to avoid being considered as underfranked?

Yes. Where dividends paid in respect of different classes of shares have the same reckoning day, they are considered to be same day dividends in terms of subsection 160AQE(2) of the Income Tax Assessment Act 1936. In this circumstance, these dividends must be franked at the same rate.

If different reckoning days apply, there is no requirement for a company to frank dividends on different classes of shares at the same rate.

Note that in some situations, different classes of shares (as described in the company's Articles of Association) may not constitute different classes of shares for imputation purposes (subsection 160APE(2)).