Income Tax Act 2007 section 673

Meaning of "interest period"

Section 673 defines how "interest periods" are determined for securities under the accrued income scheme.

• The first interest period runs from the day after securities are first issued until the first interest payment day or 12 months, whichever is earlier; subsequent periods follow the same pattern from the end of the previous period.
• The 12-month cap prevents charges under the accrued income scheme from being deferred through long gaps between interest payment days — any period exceeding 12 months is broken into successive 12-month segments and a remaining rump period.
• The final interest period ends on the last interest payment day for those securities, unless a conversion or (for gilt-edged securities) a stripping event occurs during the period.
• If a conversion or gilt strip exchange occurs during an interest period, that period is treated as ending on the date it would have ended regardless of the event — the event does not cut the period short or extend it.