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ATO Interpretative Decision

ATO ID 2001/749 (Withdrawn)

Income Tax

Section 160APE - What constitutes a class of shares
FOI status: may be released
  • This ATO ID is withdrawn because it contains a view in respect of a provision of the Income Tax Assessment Act 1936 that does not apply after the 2005-06 income year. Despite its withdrawal, this ATO ID continues to be a precedential ATO view in respect of decisions for income years up to, and including, the 2005-06 income year.
    This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

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)?

Decision

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

Facts

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.

Reasons for Decision

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.

Date of decision:  30 October 2001

Year of income:  Year ended 30 June 2001 Year ending 30 June 2002 Year ending 30 June 2003 Year ending 30 June 2004

Legislative References:
Income Tax Assessment Act 1936
   section 160APE
   subsection 160APE(1)

Keywords
Shares

Business Line:  Private Groups and High Wealth Individuals

Date of publication:  30 November 2001

ISSN: 1445-2782

history
  Date: Version:
  30 October 2001 Original statement
You are here 3 October 2014 Archived

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