Income Tax Act 2007 section 663

Transfers without accrued interest to makers of manufactured payments

Section 663 reduces the deemed accrued income payment to a person who makes manufactured payments on securities, where that person has contracted to sell fewer securities than they have received.

• This section applies where the manufactured payments conditions are met and the seller has contracted to sell a smaller nominal value of securities than the amount actually transferred to them
• The deemed payment to the seller under the accrued income scheme is reduced by the portion attributable to the "matched securities" — those whose nominal value equals the securities the seller has contracted to sell on
• Where there are multiple transfers of securities to the seller, earlier transfers are matched first before later ones
• The purpose is to prevent a double tax charge arising under both the manufactured payments rules and the accrued income scheme on the same economic transaction

---