Post on 17-Jul-2020
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RMF & LTFRMF & LTFThe tax benefit twins ... worth investing in
RMF & LTFRMF & LTFg
With the Ministry of Finance as Shareholder
ContentContent
Retirement Mutual Fund (RMF)Retirement Mutual Fund (RMF)( )( )Long Term Equity Fund (LTF)Long Term Equity Fund (LTF)Tax Benefits ofTax Benefits of RMF &RMF & LTFLTF
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RMFRMFRMFRMFRETIREMENT MUTUAL FUNDRETIREMENT MUTUAL FUNDRETIREMENT MUTUAL FUNDRETIREMENT MUTUAL FUND
With the Ministry of Finance as Shareholder
What is RMF?What is RMF?
RRetirement MMutual FFund
A mutual fund supported by the government to encourage continuous, long term savings , g g
With objective for investors to prepare for retirement
I t ill i t t b fit th i t tInvestors will receive greater tax benefits than investments in general mutual funds
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Characteristics of Characteristics of RMFRMF
d d d fInvestments and redemption proceeds from RMF are exempt from tax, under specified conditions
RMF will not pay any dividends
h h i li hi hInvestors can choose the investment policy which best suits their style, such as fixed income or
iequity
Units of RMF can be transferred to other RMFsUnits of RMF can be transferred to other RMFs among asset management companies
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Tax Benefits of RMFTax Benefits of RMF
Investments in RMF are exempt from tax at face pvalue, but must not be more than 15% of annual income and when combined with PVD or Pension Fund, must not exceed 500,000 Bahtmust not exceed 500,000 Baht
RMF ( f i ) PVD or Pension Fund 500,000 Baht<+
R d ti d f RMF t f t
(< 15% of income) PVD or Pension Fund 500,000 Baht +
Redemption proceeds from RMF are exempt from tax when the investor is no less than 55 years of age and had invested for no less than 5 yearsinvested for no less than 5 years
In the case of redemption due to physical disability or death redemption proceeds from RMF will not be subject
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death, redemption proceeds from RMF will not be subject to tax
RMF Tax Benefit ConditionsRMF Tax Benefit Conditions
Invest continuouslyMust invest continuously, no less than once a year and
Must not stop investing for more than 1 year consecutively ( i h h i i )(except in years where there is no income)
Mi i i t t f 3% f l i 5 000 B htMinimum investment of 3% of annual income or 5,000 Baht (whichever is lower)
Must hold units until the age of 55 years and invested for a period of no less than 5 years
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NonNon--compliance with RMF conditionscompliance with RMF conditions
Non-compliance with conditions& invest > 5 yearsNon-compliance with conditions
& invest < 5 years
P t ti f thPay tax exemptions for the previous 5 calendar years
Pay all tax exemptions
Pay tax onCapital gains
Payment of tax exemptions Pay by March of the year following the non-compliance: y y y g pno extra charges Late payment after March of the year following the non-compliance: pay an extra 1.5% per month of the taxes to be
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compliance: pay an extra 1.5% per month of the taxes to be paid from April onwards
MFC’s RMFsMFC’s RMFs
MFC’s RMFsMFC’s RMFsMFC s RMFsMFC s RMFs
MFC Capital Protection Retirement Mutual Fund(M-CR)MFC Retirement Saving Fund (M-SAVING)
MFC Retirement Bond Fund (M-BOND)MFC Retirement Fixed Income Fund (M-FIX)
MFC Retirement Value Fund (M-VALUE)
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MFC’s RMFsMFC’s RMFs
Fund Investment Policy Trading FrequencyFund Investment Policy Trading Frequency
M CR
Aim to invest in Government Bonds Treasury Bills or Corporate
Every last Friday of May and NovemberM-CR Bonds, Treasury Bills or Corporate
Bonds not over 80% for capital protection
May and November
Aim to invest in deposits and Every business dayM-SAVING
Aim to invest in deposits and money market securities
Every business day
Aim to invest in deposits and Every business dayM-BOND
pGovernment securities
y y
M FIXAim to invest in Corporate bonds
hi h h hi h dit tiEvery business day
M-FIX which have higher credit rating and government securities
M VALUEAim to invest in value stocks of Every business day
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M-VALUE listed companies
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LTFLTFLTFLTF
LONG TERM EQUITY FUNDLONG TERM EQUITY FUNDLONG TERM EQUITY FUNDLONG TERM EQUITY FUND
With the Ministry of Finance as Shareholder
What is LTF?What is LTF?
Long Term Equity Fundg q y
A mutual fund supported by the government to encourage long term investment in the stockencourage long term investment in the stock market An equity fundAn equity fundInvestors will receive greater tax benefits than investments in general mutual fundsinvestments in general mutual funds
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Characteristics ofCharacteristics of LTFLTF
I t t d d ti d f LTFInvestments and redemption proceeds from LTF are exempt from tax, under specified conditions
O i t t li hi h i t i tOne investment policy which is to invest on average no less than 65% of NAV in common stocks in any
ti i daccounting period
Units of RMF can be transferred to other RMFs among asset management companies
Open-ended fund which can be redeemed everyOpen ended fund which can be redeemed every business day
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Tax Benefits ofTax Benefits of LTFLTF
Investments in RMF are exempt from tax at face l b t t t b th 15% f lvalue, but must not be more than 15% of annual
income and must not exceed 500,000 Baht
LTF (< 15% of income) 500,000 Baht<
Capital gain from redemption will not be taxed if investment has been no less than 5 calendar yearsIn the case of redemption due to physical disability or death, redemption proceeds from LTF will be exempt from tax
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Conditions of investment in LTF for tax benefitsConditions of investment in LTF for tax benefits
Invest by 2016
Must hold LTF units for no less than 5 years (calendar years)
Year of initial investment
2008
2006
2007
2008
2004
2005
Condition met
. 20
04
. 20
05
. 20
06
. 20
07
. 20
08
. 20
09
. 20
10
. 20
11
. 20
12
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Jan
.
Jan
.
Jan
.
Jan
Jan
Jan
.
Jan
Jan
Jan
NonNon--Compliance withCompliance with LTF conditionsLTF conditions
Pay back tax exemption + extra 1.5% per month of
total tax exemption f A il f th ti
NonNon--compliancecompliance
from April of the year exemption is requested till the month
payment is made
= Invest < 5 calendar
years Include Capital Gain in calculating income tax
(By March of the year following non-compliance)
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MFC’s LTFsMFC’s LTFs
MFC’s LTFsMFC’s LTFs
MFC Activity Long Term Equity Fund (MA-LTF)
MFC Value Long Term Equity Fund (MV LTF)MFC Value Long Term Equity Fund (MV-LTF)
MFC Global Long Term Equity Fund (MG-LTF)MFC Global Long Term Equity Fund (MG LTF)
MFC Islamic Long Term Equity Fund (MIF-LTF)
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MFC’s LTFsMFC’s LTFs
Fund Investment Policy Dividend Policy
Trading Frequencyy Policy Frequency
MA-LTF Aim to invest in high growth stocks and value stocks with market price lower than
the intrinsic value as well as other
None
the intrinsic value, as well as other securitiesMV-LTF
MG-LTF Aim to invest up to 65% of NAV in listed stocks on the SET and invest not over 35%
Every Business day
No more than 2 times a year at a rate of no
th
of NAV in the Global Stock Market value stocks and will assess investment in growth stocks, as well as other securities
MIF-LTF Aim to invest in Equity securities that y ymore than
30% of accumulated
profit
MIF-LTF Aim to invest in Equity securities that comply with Islamic principle
- Up to 65% in Listed stocks- Not over 15% in Non-Listed stocks p o t
The rest of the fund will be invested in deposits, financial instruments, debt instruments and other securities that comply with the Islamic principles as well
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Risk Level of MFC RMF & LTFRisk Level of MFC RMF & LTF
Level ofFund’s risk
5Derivatives FundM-A-LTF, MV-LTF,
MG-LTF, MIF-LTF
4Equity fund
3
Fi d i F d
Flexible fund
M-FIX
M-VALUE
2
Short term fixed income fund
Fixed income Fund
M-SAVING
M-BOND
Level of fund’s return
1
0Capital Protected Fund
M-CR
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M CR
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Tax Benefits of RMF & LTFTax Benefits of RMF & LTFTax Benefits of RMF & LTFTax Benefits of RMF & LTF
With the Ministry of Finance as Shareholder
ExampleExample 1 1 –– Monthly salary of Monthly salary of 3030,,000 000 BahtBaht
Tax benefits from investments inTax benefits from investments in RMF andRMF and LTFLTFTax benefits from investments inTax benefits from investments in RMF andRMF and LTFLTF
No investment in RMF or LTF
Invest in RMF Invest in LTF Invest in both RMF + LTF
oTaxable annual income 360,000 360,000 360,000 360,000
Deduct Provident Fund that is over 10,000 Baht
8,000 8,000 8,000 8,000
Total income before tax benefits 352,000 352,000 352,000 352,000Total income before tax benefits 352,000 352,000 352,000 352,000
Deduct expenses 40 % not over 60,000 Baht
60,000 60,000 60,000 60,000
General exemption 30,000 30,000 30,000 30,000
Provident Fund (5%) 10,000 Baht 10,000 10,000 10,000 10,000
Social Security 9,000 9,000 9,000 9,000
Total expenses/tax benefit deductions 109,000 109,000 109,000 109,000
Net income after expenses/tax benefit deductions
243,000 243,000 243,000 243,000
Subscription of RMF - 54,000 - 54,000Subscription of LTF - - 54,000 54,000Taxable net income 243,000 189,000 189,000 135,000
Taxes due*Income 150,001-500,000 taxed 10%
9,300 3,900 3,900 -
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Tax savings from investment - 5,400 5,400 9,300
Save Save 99,,300 300 Baht in taxes per yearBaht in taxes per year !!!!!!
ExampleExample 2 2 –– Monthly salary of Monthly salary of 300300,,000000 BahtBaht
Tax benefits from investments inTax benefits from investments in RMF andRMF and LTFLTF Tax benefits from investments inTax benefits from investments in RMF andRMF and LTFLTF
No investment in RMF & Invest in RMF Invest in
LTF
Invest in both
RMF LTFt in RMF &
LTF LTF
RMF + LTF
Taxable annual income 3,600,000 3,600,000 3,600,000 3,600,000
Deduct Provident Fund that is over 10,000 Baht
170,000 170,000 170,000 170,000BahtTotal income before tax benefits 3,430,000 3,430,000 3,430,000 3,430,000
Deduct expenses 40 % not over 60,000 Baht 60,000 60,000 60,000 60,000
General exemption 30,000 30,000 30,000 30,000 Provident Fund (5%) 10,000 Baht 10,000 10,000 10,000 10,000
Social Security 9,000 9,000 9,000 9,000Total expenses/tax benefit deductions 109,000 109,000 109,000 109,000Net income after expenses/tax benefit 3 321 000 3 321 000 3 321 000 3 321 000Net income after expenses/tax benefit deductions
3,321,000 3,321,000 3,321,000 3,321,000
Subscription in RMF - 520,000 - 520,000Subscription in LTF - - 700,000 700,000Taxable net income 3,321,000 2,801,000 2,621,000 2,101,000, , , , , , , ,
Taxes due*Income 150,001-500,000 taxed 10%*Income 500,001-1,000,000 taxed 20%*Income1,000,001-4,000,000 taxed 30%
831,300 675,300 621,300 465,300
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Tax savings from investment - 156,000 210,000 366,000
SaveSave 366366,,0000 00 Baht in taxes per yearBaht in taxes per year !!!!!!
DisclaimerDisclaimer
This document is proprietary to MFC Asset Management Public Company Limited (“MFC”) and prepared with the intention to provide information ( ) p p pabout products and services offered by MFC and used for presentation in Thailand only.MFC reserves the right to prohibit reproduction and distribution, or any th t th t lt th i f ti ithi t f thother acts that may alter the information within, or parts of the
document or of the document in its entirety without the prior written consent of MFC.Some information contained within was referenced from reliable sourcesSome information contained within was referenced from reliable sources and MFC does not guarantee the accuracy and completeness of said information as it is subject to change depending on when the information was referenced.Information and views in this document are preliminary views only and are not to be considered as a pledge or guarantee of performance.This document has not been audited or approved by any official agency
d d d f h d h ld b dg
or persons. Any decisions derived from this document should be done with caution and care. If you should have any queries regarding this document, please contact our staff directly for clarification.
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WarningWarning
Past performance of the Fund is not an indication of future performance.Performance measurement is carried out in conformance with thePerformance measurement is carried out in conformance with the standards set by the Association of Investment Management Companies (AIMC).There are certain investment risks involved investors should study theThere are certain investment risks involved, investors should study the available information before making the decision to invest. Investors should study the tax manual of long-term equity funds (LTF) o eti ement m t al f nds (RMF)or retirement mutual funds (RMF).Investment in units is not a cash deposit and has certain risks. Investors should invest in said mutual fund when it is determined that th t l f d it th i t ’ i t t bj ti d ththe mutual fund suits the investors’ investment objectives and the investor is able to accept the risks which may occur from the investment.
h ld h d l f d h h hInvestors should invest in the said mutual fund when they have an understanding of the risks of derivatives. Investors should also consider the suitability of investment
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