Special wealth tax rules apply to children and young people under 22 years of age who have received compensation or insurance payments for personal injuries or loss of provider. For more information on the wealth tax exemption, see the article "Tax exemption for compensation and insurance payments to children for personal injury or loss of provider".
If either you or a child of yours has during either the past income year or previously received a payment which is exempt from wealth tax, you will not be able to use the submission exemption in connection with the tax return. You must then give information either in the tax return or in a separate letter to the tax office concerning the amounts that originate from the compensation or insurance payment.
Although the payment will be exempt from wealth tax, these amounts will still be entered as capital in the precompleted tax return.
Compensation and insurance payments are often deposited in a bank account, securities, etc. and the amounts will be reported to the Norwegian Tax Administration by the bank, VPS, etc. and registered as capital under the child. The bank, VPS, etc. managing the money will not be aware that this amount is exempt from wealth tax. In addition, a bank account may contain both money on which wealth tax is payable (e.g. inheritance) and money which is exempt from wealth tax (e.g. compensation).
Whether a child under 17 has received such compensation/payment is of no significance as regards whether they are assessed with their parents or independently as a single taxpayer.
If the child is assessed together with the parents, the amount will be precompleted in the parents' tax return. If the child is assessed independently, the amount will be precompleted in the child's tax return.
How do I enter the information in my tax return for 2016?
NB! You must not alter the amounts under the items in the tax return. It is very important that the person submitting the tax return does not delete the amounts exempt from wealth tax in the precompleted tax return.
Fill in item 5.0
Instead, you must enter information in the tax return under item 5.0 concerning the amount that concerns interest and compensation which is still held. This is necessary to enable the tax office to identify which taxpayers have assets which are exempt from wealth tax, and to treat the capital and interest correctly both in this income year and in the subsequent income years through until the taxpayer reaches the age of 22 (when the ordinary wealth tax rules take effect).
Children who are assessed with their parents
A special tax calculation is performed when a child is assessed with their parents. The capital and interest from the compensation or insurance payment are added to the parent's capital and income, but the tax office performs a calculation which results in the compensation capital being exempted from wealth tax and the interest being assessed separately (known as separate tax assessment).
Separate tax assessment
Note that separate tax assessment is not the same as independent tax assessment. Separate tax assessment of interest means that a separate personal allowance is granted when calculating tax on interest income, so that in practice no tax will be payable on the interest income.
Interest income of NOK 40,000 minus the personal allowance of NOK 51 750 = zero tax on the interest income.
In the case of the separate tax assessment of interest, no separate tax return will be sent out for the interest only. The tax office will carry out the tax assessment in the way that is most favourable for the taxpayer.