Income Tax Act 2007 section 630

Making accrued income profits: settlement day outside interest period

Section 630 deals with how accrued income profits arise when securities are transferred and the settlement day falls after the end of the final interest period.

• Where securities with unrealised interest or variable rate securities are transferred and the settlement day falls after the last interest period, the transferor is treated as making accrued income profits.
• A transfer of variable rate securities may also qualify as a transfer with unrealised interest, meaning accrued income profits can arise on both counts from a single transfer.
• Unlike transfers that settle within an interest period, there is no deemed payment by the transferor here, and consequently no accrued income loss can arise for these types of transfers.
• If the transferor is an excluded transferor under section 638, the transfer is disregarded; section 681 provides a separate exemption for unrealised interest received by the transferee after the transfer.