Commentary on Sections Overview Chapter 2: Accrued income profits and losses Section 630: Making accrued income profits: settlement day outside interest period
1842.This section provides that accrued income profits are made where the settlement day for the transfer involved occurs after the end of the securities’ last interest period (and so does not fall in an interest period). It is based on sections 716(3), 717(10) and (11) of ICTA.
1843.A transfer of variable rate securities may also be a transfer with unrealised interest, so the section may apply doubly to a single transfer. An amount of accrued income profits will be found under both subsections (1) and (3) of section 631.
1844.In contrast with transfers which take place in an interest period (see section 634 and section 635), where there is a deemed payment made by the transferor (partly matching the approach in section 628 and section 629), no such deemed payment is introduced here. The section deems the transferor to have made accrued income profits by virtue of the circumstances set out in subsection (1). And without any deemed payments, an accrued income loss cannot arise in the case of the transfers to which this section applies.
1845.See Change 101 in Annex 1 which treats other transfers of variable rate securities where the settlement day is outside an interest period as redemption of such securities. And see Change 102 in Annex 1 which drops the fiction that transfers of variable rate securities are transfers with accrued interest.