Section 623 — Income Tax Act 2007: Transfers with accrued interest

Transfers with accrued interest 623 1 The general rule is that securities are transferred with accrued interest for the purposes of this Chapter if they are transferred with the right to receive interest payable—

a in a case where the settlement day is an interest payment day, on the settlement day, and b in any other case, on the first interest payment day after the settlement day.

2 But, in the case of the transfers specified in subsection (3), subsection (4) applies instead of subsection (1).

3 The transfers are those treated as made under—

a section 620(1)(b) (conversion),

b section 650 (trading stock appropriations etc),

c section 651 (owner becoming entitled to securities as trustee),

and d section 652 (securities ceasing to be held on charitable trusts).

4 If the person treated as the transferor had the right to receive interest payable as mentioned in subsection (1)(a) or (b), the securities are treated as transferred with accrued interest.

5 This section is subject to section 626 (transfers of variable rate securities).

6 See also— section 648(6) (certain exchanges of strips treated as transfers with accrued interest), and section 649(4) (issue of new securities with extra return treated as transfer with accrued interest).