Mel,
Sorry for the highjack but you are mis-informed.
The way that a design appears on the tshirt has more to do with the iron on transfer itself than the design.
If you use that design with a light transfer than all white areas of the design (or any areas that lack color - including transparent) will be clear.
If you use a dark transfer, all white areas (or any areas that lack color) will be white. An image with the transparent background is good for placing on a background as in your sample but if you print it to a dark transfer. all transparent areas will also be white.
The easiest way to picture it is this: if you print the design to a white sheet of paper, how will it look? all areas that do not print a color will be just the white of the paper you are printing it on.
Did that explanation make sense? I do not mean to put my nose where it doesn't belong, but I would hate for you and the OP to think it would be clear and then find out otherwise (the hard way).