SAIM4190 | Accrued Income Scheme: transfers to legatees

No AIS charge on death

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.