Commentary on Sections Overview Chapter 2: Accrued income profits and losses Section 628: Making accrued income profits and losses: general rules
1835.This section determines if accrued income profits or accrued income losses are made when (as is normally the case) the settlement day for the transfer in question falls within an interest period. It is based on section 714 of ICTA.
1836.The accrued income scheme applies predominantly:
	where securities are transferred with accrued interest and
	where they are transferred without accrued interest.
1837.The aim in both cases is to ensure that the accruing interest is taxed as income of the person who is the owner of the securities over the period in which the interest accrued. The approach taken by this section is to treat the parties as though a payment is made from one to the other as a result of the transfer.
1838.Where securities are transferred with accrued interest, the transferee is treated as making a payment to the transferor. And, where securities are transferred without accrued interest, the transferor is treated as making a payment to the transferee (see sections 632 and 633). This approach reflects the reality of these transactions, as the purchase price on a sale of securities is increased or reduced according to whether interest which has accrued or will accrue goes to the transferor or transferee.
1839.The calculation in section 628 is made by comparing the total amount of the payments treated as made by a person to the total amount of the payments treated as made to that person for each kind of security transferred in each interest period.
1840.Subsection (2) provides that section 630 applies instead if the settlement day falls outside an interest period (this can only be the case in relation to some transfers of variable rate securities or a transfer with unrealised interest).