When an individual dies, securities in the deceased’s
estate automatically vest in the deceased’s personal
representatives. This vesting is not a transfer for the purposes of
the accrued income scheme.
Where an individual who holds securities dies and the
personal representatives transfer the securities to a legatee, in
the interest period in which the individual died, ITA07/S636 (2)
disapplies the rules which treat a payment as made. 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.
A legatee includes any person taking the securities under a
testamentary disposition or on an intestacy or partial intestacy.
If the transfer does not take place in the interest period in
which the individual died, then the accrued income scheme applies
as normal, although the exemption in ITA07/S681 for unrealised
interest received after a transfer may still apply (
SAIM4350).
ITA07/S636 (3) deals with a transfer of variable rate
securities. It treats accrued income profits as not arising (rather
than a payment as not being made). This effectively provides that
transfers to legatees of variable rate securities after the end of
the only or last interest period of the securities are covered by
the exception in ITA07/S636.
