Income Tax Act 2007 section 644

Individuals to whom the remittance basis applies

Section 644 excludes individuals who use the remittance basis of taxation from the accrued income scheme in respect of interest on transferred securities.

• Individuals taxed on the remittance basis are excluded from the accrued income scheme for interest on securities they transfer.
• The remittance basis taxes individuals on income actually received (remitted) in a tax year, rather than on income arising in that year.
• The accrued income scheme works on an arising basis, charging accrued income profits as they accrue rather than when received.
• Because the two approaches are fundamentally incompatible, remittance basis users are carved out of the accrued income scheme to avoid a mismatch in how their income would otherwise be taxed.