1. With the Photo-Object selected, choose Item > Clipping (or Item > Modify then the Clipping tab).

2. From the drop down list, choose Alpha Channel.

If necessary, you can further tweak the clipping path in the Clipping window — giving it a tighter or looser fit.

Now the white box is gone and our bunny looks right at home on any background.

By default, the clipping path is applied only to the outside edges of the Photo-Object. Sometimes this isn't the effect you want. You'll need a third step.

The white box is gone but look at the holes in the 8. The pink background isn't showing through.

3. In the Clipping window, uncheck the box that says “Outside Edges Only.”

Now you have a truly transparent background.

Unfortunately, Photo-Objects with subtle drop shadows don't work quite so neatly. Instead of a soft, transparent shadow, the drop shadow turns solid black. Using Item > Clipping removes the drop shadow entirely but with rough edges remaining.

The fix is less than satisfactory. The softer drop shadow can be reclaimed using Adobe Photoshop or Corel Photo-Paint. Unfortunately, the way this is handled gives less than beautiful results when we bring the new TIFF or an EPS graphic back into QuarkXPress. An uneven clipping path and a halo of white pixels that can't be adjusted away with the Clipping settings render some images unusable.

To learn more about using Photo-Objects, including their limitations, read my full review of the product.