Commentary on Sections Overview Chapter 2: Accrued income profits and losses Section 636: Exception where there is a transfer to a legatee
1871.This section disapplies rules which treat a payment (or profits) as made if personal representatives transfer securities to a legatee. It is based on section 721 of ICTA.
1872.Under subsection (2), if the personal representatives of a deceased person transfer securities to a legatee in the interest period in which the individual died, neither the personal representatives nor the legatee are treated as making or receiving payments. So, in these circumstances no accrued income profit or accrued income loss can arise. But, because the transfer itself is not excluded, section 681 (exemption for unrealised interest received after a transfer within Chapter 2) may still be in point.
1873.Subsection (3) deals with certain transfers of variable rate securities. It treats accrued income profits as not arising, rather than a payment as not being made, in line with the approach taken in sections 630 and 631. It applies to all variable rate securities (see Change 101 in Annex 1 which extends the treatment of transfers of variable rate securities on redemption which was provided under section 717(11) of ICTA to other transfers of variable rate securities where the settlement day is outside an interest period).
1874.If the transfer does not take place in the interest period in which the individual died, then the accrued income scheme applies to that transfer as normal.
1875.“Personal representatives” has the meaning given by section 989. (See Change 150 in Annex 1.)