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Tax Transparent Fund (TTF)

A tax transparent fund (TTF) is an investment vehicle in which the income and gains are not taxed at the fund level but are instead passed through to the investors, who are responsible for paying tax in their own jurisdictions. This structure avoids double taxation, making it an attractive option for cross-border investments. Investors in a TTF are taxed as if they directly own the underlying assets, leading to tax efficiencies.

Example

A pension fund invests in a tax transparent fund, allowing its gains and income to be taxed at the investor level rather than being taxed twice—once at the fund level and again at the investor level.

Key points

• An investment vehicle where income and gains are passed directly to investors without taxation at the fund level.

• Reduces double taxation, particularly useful for cross-border investments.

• Investors are taxed based on their own tax status and jurisdiction.

Quick Answers to Curious Questions

They avoid double taxation by ensuring income and gains are taxed only at the investor level, making them more efficient for international investments.

Investors report income and gains from the fund as if they directly owned the underlying assets, according to their own tax jurisdictions.

A TTF passes income and gains directly to investors without taxing them at the fund level, while a traditional mutual fund may be taxed before distributing profits to investors.