In case the investor violates the conditions by selling LTF unit trusts held for the less than 5 years but never receive tax benefits, will the investors be held liable able of back taxes?

In case the investor violates the conditions by selling LTF unit trusts held for the less than 5 years is considered to be a breach of conditions and the investor is liable for all back taxes even though have never received any tax benefit.

Note: if the unit holder sell back the unit trusts held more than 5 years but never receive tax benefit since the beginning of the investment, the unit holder will be considered to have violated the conditions and liable for all back taxes from the beginning of the investment period.

Long Term Equity Fund (LTF) checklist before making investment

1. Ask yourself if you are willing to accept the high risk level as LTF invest in securities

2. LTF investment is based on asset allocation, not the whole fund will be invested in LTF

3. Prepared for long-term investment, the minimum of 5 calendar years

What is Long Term Equity Fund (LTF)?

LTF is abbreviated from Long Term Equity Fund, a type investment fund that invests primarily on stocks with the purpose of increasing the ratio of institutional investors (mutual funds) for long-term investments in the stock exchange market in order to stabilize the market. LTF investors are also eligible for tax benefits as an incentive for investment.

What are the investment conditions of Long Term Equity Fund (LTF)?

To be eligible for tax benefits, the investors are required to buy unit trusts and hold them for at least 5 years (calendar year, for instance, an investment made in 2004 would meet the 5 year requirement in January of 2009. Similarly, an investment made in 2005 would meet the requirement in January of 2010. However, to receive tax benefits from LTF, investments must be made before 2016.

What will happen if investor violates the Long Term Equity Fund (LTF) investment terms and conditions?

The investor take the following actions:

1. Pay back the exempted taxes immediately as there is a “fine” at the monthly rate of 1.5% on the exempted tax amount, starting from April of the year the exemption is requested to the month the tax return is filed. For any sale on any part of LTF, the investor must pay back the exempted taxes based on the sale plus the “fine”

2. The capital gain taxes must be paid within March of the following year. The profits from the sale must be calculated for taxation. In practice, when the investor sells unit trusts, the asset management company would automatically deduct 3% of the sale profits.

How is Long Term Equity Fund (LTF) different from other types of mutual funds?

1. There are tax benefits when the investment meet certain conditions

2. If investment is less than 5 year old, the capital gain must be calculated into personal income taxes.

What is the investment policy of Long Term Equity Fund (LTF)?

There is only one policy, invest in common stocks listed on the stock exchange at the minimum of 65% of the fund’s net asset value. Each LTF have different details, for instance, some LTFS may focus investing in SET50 stocks or as the company see fit depending on that particular LTF policy. Some LTFs may even have policy to pay out dividends.

What are the tax benefits of Long Term Equity Fund (LTF)?

If follow the investment terms and conditions (number 5), the investors will receive tax benefits in two ways:

1. Money invested in LTF is exempted from being calculated into personal income tax, not exceeding 15% of the annual income. When calculated with the PVD and the Government Pension Fund, the total benefits must not exceed 500,000 baht PVD/GPF+RMF (<15% of the annual income)<500,000 baht. If the amount invested exceeds 15% of the annual income or 500,000 baht, capital gains from selling unit trusts must be calculated for personal income taxes.

2. Capital gains from trading is exempted from personal income taxes

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