Buy more LTF with an existing account (without work visa/permit)

[Shane77]

I worked in Thailand in 2013 and 2014, bought LTF for the year 2013 and quit my job in March 2014, then left Thailand the following month. Of course my work visa/permit got voided at that time and I currently don't have them.

My questions are:

Q1. Am I still able to buy LTF this year in 2014 without work visa/permit? I already have an LTF account at Bangkok Bank and I would like to buy some more of the same fund with the same account.

Q2. If I can still buy LTF this year, is the amount bought still tax-exempt for its capital gain? Or they could put any withholding tax on it?

Q3. If I can still buy LTF this year, am I still able to claim the purchased LTF amount as tax deduction for this year's tax return? I'm not even sure if I could do a tax return for this year without work visa/permit, though.

I'm visiting Thailand this November and would like to buy more LTF if at least answers of Q1 & Q2 are yes (I don't really care about Q3 since I didn't earn much in 2014). I could ask at my bank branch when I visit, but it would be nicer if I could get some ideas about it now.

Edited August 22, 2014 by Shane77

[fletchsmile]

LTFs are really just mutual funds with a tax wrapper. Anyone able to buy a mutual fund can buy an LTF. Just that if you are not a tax payer or if you exceed the THB 500k/ 15% limit you won't get the tax relief. So:

Q1: You should be able to buy more of the same fund. The only difficulty you might have is if your LTF provider wants to see a long term visa for account opening or any other reason. As a rule of thumb, with my bank if I buy a fund of a fund management house where I already have at least one of their funds they don't ask to see the visa part. If I want a new fund with a new fund management house they usually ask for passport and visa page

Q2: Yes it is still exempt from capital gains. Mutual funds for individual investors are usually exempt from capital gains whether or not they are LTFs

Q3: You can claim tax relief on the lower of 15%of your earned income or THB 500k. So if you're not working in Thailand then you will have no earned income. So your max is 15% of zero. So you won't be able to get tax relief. If living here and tax resident you're still expected to complete a tax return, even if you only have things like bank interest.

Given that you're not earning and won't be able to get the tax relief there's no advantage to an LTF compared to any other mutual fund. OTher funds may have a wider range of choice and allow you to branch out from just Thai equities in LTFs should you wish to do so.

Cheers

Fletch

[Time Traveller]

LTFs are really just mutual funds with a tax wrapper. Anyone able to buy a mutual fund can buy an LTF. Just that if you are not a tax payer or if you exceed the THB 500k/ 15% limit you won't get the tax relief. So:

Q1: You should be able to buy more of the same fund. The only difficulty you might have is if your LTF provider wants to see a long term visa for account opening or any other reason. As a rule of thumb, with my bank if I buy a fund of a fund management house where I already have at least one of their funds they don't ask to see the visa part. If I want a new fund with a new fund management house they usually ask for passport and visa page

Q2: Yes it is still exempt from capital gains. Mutual funds for individual investors are usually exempt from capital gains whether or not they are LTFs

Q3: You can claim tax relief on the lower of 15%of your earned income or THB 500k. So if you're not working in Thailand then you will have no earned income. So your max is 15% of zero. So you won't be able to get tax relief. If living here and tax resident you're still expected to complete a tax return, even if you only have things like bank interest.

Given that you're not earning and won't be able to get the tax relief there's no advantage to an LTF compared to any other mutual fund. OTher funds may have a wider range of choice and allow you to branch out from just Thai equities in LTFs should you wish to do so.

Cheers

Fletch

I don't know if you are aware of the exact meanings of your term "earned" or not.

But your point number 3. is not quite correct. The tax relief is 15% of total income (earned and unearned) or 500k. It does not matter if he is working (earning) or not. He might still have an income from investments/rent/royalties etc (passive or uunearned income), so he will still be able to claim tax relief for the amount contributed to the LTF on his passive income, the only condition is that he files a tax return.

So yes it is possible in such case there is an advantage from LTF even though he is not working.

[Time Traveller]

deleted double post

Edited August 23, 2014 by Time Traveller

[fletchsmile]

LTFs are really just mutual funds with a tax wrapper. Anyone able to buy a mutual fund can buy an LTF. Just that if you are not a tax payer or if you exceed the THB 500k/ 15% limit you won't get the tax relief. So:

Q1: You should be able to buy more of the same fund. The only difficulty you might have is if your LTF provider wants to see a long term visa for account opening or any other reason. As a rule of thumb, with my bank if I buy a fund of a fund management house where I already have at least one of their funds they don't ask to see the visa part. If I want a new fund with a new fund management house they usually ask for passport and visa page

Q2: Yes it is still exempt from capital gains. Mutual funds for individual investors are usually exempt from capital gains whether or not they are LTFs

Q3: You can claim tax relief on the lower of 15%of your earned income or THB 500k. So if you're not working in Thailand then you will have no earned income. So your max is 15% of zero. So you won't be able to get tax relief. If living here and tax resident you're still expected to complete a tax return, even if you only have things like bank interest.

Given that you're not earning and won't be able to get the tax relief there's no advantage to an LTF compared to any other mutual fund. OTher funds may have a wider range of choice and allow you to branch out from just Thai equities in LTFs should you wish to do so.

Cheers

Fletch

I don't know if you are aware of the exact meanings of your term "earned" or not.

But your point number 3. is not quite correct. The tax relief is 15% of total income (earned and unearned) or 500k. It does not matter if he is working (earning) or not. He might still have an income from investments/rent/royalties etc (passive or uunearned income), so he will still be able to claim tax relief for the amount contributed to the LTF on his passive income, the only condition is that he files a tax return.

So yes it is possible in such case there is an advantage from LTF even though he is not working.

Yes, I'm aware of the meaning of "earned" which is specifically why I used it, as opposed to "investment income"

I'm not sure where you got the idea from that people can use income from investments.

Here's the link to the Thai revenue department's website which describes it as:

"Amount actually paid at the rate not more than 15% of wage, but not exceeding 500,000 baht"

"15% of wage" is their translation from the original Thai. An accountant or tax person would tend to use the term earned income in UK tax, which is why I used it - habit I guess.

http://www.rd.go.th/publish/6045.0.html

Here's also a guide from one of the major accountancy firms here that also describes it as 15% of wages

http://www.grantthornton.co.th/download.php?info=publications&submenu=63

Would be interested to know if anyone has actually got away with using investment income. Wouldn't surprise me if they have, as taxation and enforcement can be a bit sloppy here. But the Revenue is pretty clear with 15% of wages is what it should be in terms of the limit.

Edit: What you might be referring to is that the deduction is made from assessable income (which includes both earned and unearned/investment income). The limit however, should be based based on 15% of wages/earned income.

Cheers

Fletch

Edited August 23, 2014 by fletchsmile

[Time Traveller]

ok thanks Fletch my reference is from an LTF fund document several years old which refers only to income. I'll need to check that as it may have been updated to specifically apply only to the 15% of income from salary...so please disregard my post.

[Shane77]

Fletch, thank you for your reply.

Good thing I may be able to buy some more LTF. I'm thinking to buy exactly the same fund.

Just one thing, you wrote, "if you're not working in Thailand then you will have no earned income". As I wrote previously, I actually worked this year from January 2014 to March, so I have earned some in Thailand this year. Just I'm not currently earning as I quit my job in Thailand in March.

Do you think I could still process a tax return for this year 2014 with LTF deduction applied?

Q3: You can claim tax relief on the lower of 15%of your earned income or THB 500k. So if you're not working in Thailand then you will have no earned income. So your max is 15% of zero. So you won't be able to get tax relief. If living here and tax resident you're still expected to complete a tax return, even if you only have things like bank interest.

Given that you're not earning and won't be able to get the tax relief there's no advantage to an LTF compared to any other mutual fund. OTher funds may have a wider range of choice and allow you to branch out from just Thai equities in LTFs should you wish to do so.

[fletchsmile]

Yes you can. As long as you have some taxable income for the year doesn't matter when. Make sure you keep your tax certificates from your LTF provider. These are usually issued each time you buy and/or a summary of all LTF purchases sent to you just after year-end. Keep your address up to date.

[Shane77]

Fletch,

Thanks again for your response. I will buy LTF and process a tax filing when I visit Thailand in November.