5.6 Investment choices – Tax saving Fund – LTF

LTF stands for Long Term Equity Fund and RMF stands for Retirement Mutual Fund which is a special fund that gives the investor rights to use the yearly capital to reduce the tax. Details are as follows.

1. What is LTF?
A LTF stands for Long Term Equity Fund, a fund that focused on investing in the stock, the government encourage it be established to increase institutional investors rate (That is, the mutual funds) to invest long term in SET. Increasing institutional investors will help stable the Thai capital market, the people who invested in the LTF individual will be eligible for tax benefits as an incentive to invest.

2. LTF suits anyone?
It suits for all groups of people need long-term investment in stocks but may not have expertise on investing in stocks, or have no time which they invested through mutual funds. However, investors must understand and accept the risk of investment and the conditions relating to the period of investment.

3. What is LTF investment policy?
A single investment policy form, investors must invest in shares listed on the Stock Exchange not less than 65 percent of net asset value. They may focus on investing in SET 50 shares by industry or invest in stocks or as the management company approved and depending on the details of each investment policy LTF.

4. What are the differences between the LTF and the other funds?
1. If investment conditions are fully invested, tax benefits.
2. No pledge or transfer the units to be a guarantee.
3. Requires redemption no more than two times per year.

5. What are the LTF terms?
To receive tax benefits for investments in LTF, investors must buy and invested LTF in at least five years (starting from the calendar since the first investment as the first year and separate funds in each year. For example, invested during 2547, they will complete five years since January 2551, if invested during the year 2548 will be full five years since January 2552).

6. What are the LTF tax benefits?
If you follow the terms of LTF investment, investors are entitled to tax benefits in two ways:
First way: Income tax from bought units in the LTF will be except as actually paid up to 15% of funds in each year and not over 500,000 Baht
Second way: The earnings from the redemption (capital gain) are free of income tax

7. What are the wrong conditions of LTF?
For redemption prior to maturity five calendar years considered wrong investment conditions, except the investors death or disability, making them impossible to abide by these conditions will not be considered wrong investment condition.

8. What happens to investors if investors broke the terms of investment?
Investors will no longer receive tax benefits and must proceed as follows:
1. Must refund the tax exemption with the surcharge in the percentage of 1.5 per month since April of the year that investors filed for tax exemption until the filing refund tax month. So, the investors should refund tax money immediately with a breach of the conditions of investment without waiting until around the normal tax payment.
2. Must pay the tax surplus profit (capital gain) by the gains realized from the sale back to the total income for last year’s sales tax return. In practice, when investors buy back, Asset Management Company will deduct withholding tax 3% of net surplus.

9. Checklists before Investing in the LTF
A self-acceptance the high risks of LTF investing, due to investments in shares are allocated to investors with regard to major the risk (asset allocation), It is not about using all capital to invest in the LTF in the long run with no less than five years.