Section 634 — Income Tax Act 2007: Payment on transfer with unrealised interest

Payment on transfer with unrealised interest 634 1 In the case of a transfer of securities with unrealised interest where the settlement day falls within an interest period, for the purposes of this Chapter a payment is treated as made to the transferor in that period.

2 The amount of the payment is equal to the unrealised interest.

3 Subsection (2) is subject to section 660 (transfers with unrealised interest: interest in default).

4 No one is treated as making the payment.

5 Accordingly, the payment is not brought into account in determining whether the transferee is treated as making accrued income profits or losses under section 628.

6 But see section 681 (exemption for unrealised interest received by transferee after transfer).

7 See section 630 for the rules that apply to transfers of securities with unrealised interest where the settlement day falls outside an interest period.