Commentary on Sections Overview Chapter 2: Accrued income profits and losses Section 623: Transfers with accrued interest
1822.This section explains when securities are transferred “with accrued interest”. It is based on section 711 of ICTA.
1823.Generally, a transfer is with accrued interest when the right to interest payable at the next payment date is given to the transferee, regardless of when in the interest period the transfer took place. The transferor gets a higher price for the securities to reflect the interest accrued to the transfer which is not received by the transferor. Certain transfers are deemed to be with accrued interest.
1824.Subsection (5) makes the section subject to section 626, which provides that variable rate securities are not treated as transferred with accrued interest. Rather the special rules in sections 630, 631 and 635 apply (see the commentary on section 626 for further information on variable rate securities).