Commentary on Sections Structure of Chapters Overview Section 672: Successive interests: assumed income entitlement of holder of absolute interest following limited interest
2561.This section (and section 673) explains the position of the absolute interest holder where successive limited and absolute interests in the residue of an estate are held by different people. It is based on section 698 of ICTA.
2562.The section only applies where the later interests arise or are created on the cessation of the previous interest otherwise than by death (the position of limited interests which cease on the death of the holder before the final tax year are dealt with in section 654(4)). All sums paid or remaining payable in respect of that interest after the tax year of death are treated as estate income arising in the tax year of death.
2563.Examples of situations, in relation to limited interests, that are covered by the section include:
	the disclaiming of a life interest which accelerates an existing interest under the will; and
	an interest which is only held until marriage or attaining a certain age.
2564.Subsections (3) and (4) contain the two rules introduced by subsection (2). They deal with the limited interest which ceases otherwise than on death. They also explain how such an interest is brought into the calculation of whether the person with the absolute interest has an assumed income entitlement and, if so, its amount. The assumed income entitlement works on a cumulative basis, so the share of the residuary income of the absolute interest holder and the basic amounts of previous years are taken into account.