Section 663 — Income Tax Act 2007: Transfers without accrued interest to makers of manufactured payments

Transfers without accrued interest to makers of manufactured payments 663 1 This section applies if—

a the manufactured payments conditions are met (see section 647(2)),

and b the nominal value of the securities subject to the seller's contract is less than that of the securities transferred to the seller.

2 The amount of the payment treated as made to the seller under section 633 on the transfer of the securities to the seller is reduced.

3 The reduction is by so much of that amount as is attributable to securities (“the matched securities”) of a nominal value equal to that of the securities subject to the seller's contract.

4 If there is more than one transfer of securities to the seller, those transferred to the seller earlier are treated as the matched securities before those transferred later.

5 In this section “ the seller ” and “ the seller's contract ” have the same meaning as in section 647.

6 For cases where subsection (1)(b) does not apply, see section 647(3) (under which the seller is treated as an excluded transferee).