The **’pass-through’ status** granted to most Category I and II AIFs is a key advantage. This means the fund itself is not taxed. Instead, the income is directly attributed to the investor, who is then taxed based on the nature of that income (capital gains, business income, etc.).
This mechanism prevents the investor’s money from being **double-taxed** (once at the fund level and again at the investor level), ensuring tax efficiency and maximizing net returns for the sophisticated investor.
