From disability pension to disability benefit

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With effect from 1 January 2015, disability pension from the National Insurance scheme became disability benefit. Disability benefit from the National Insurance scheme and disability benefits from other schemes will now be taxed in the same way as salary income.

National Insurance contributions

The rate for National Insurance contributions for disability benefit is the same as for salary income. For 2016, the rate for salary income is 8.2 percent.

Minimum standard deduction

The rates and amount limits for the minimum standard deduction will be the same as for salary income. In 2016, the rate for salary income is 43 percent. For pension income, the rate is 29 percent. The minimum standard deduction for 2016 amounts to a maximum of NOK 91,450. 

Tax limitation

The tax limitation scheme for disabled persons was abolished with effect from 2015. 

 

In Regulation No. 1860 of 19 December 2014 on tax deductions for disabled persons, the Ministry of Finance established a three-year transitional arrangement to ease the transition to the new disability benefit and salary taxation for a specific group of disability pension recipients whose income after tax dropped sharply.

The transitional rules apply to disability pension recipients who:

  • Have a degree of disability of two thirds or more and received disability pension from the National Insurance scheme in 2014 and will receive disability benefit from the National Insurance scheme in 2015 - OR
  • Have a degree of disability of two thirds or more and received disability pension from the Norwegian Public Service Pension Fund (SPK) in 2014 and 2015, but are not nor have been entitled to disability pension/disability benefit from the National Insurance scheme.

You must also:

  • Have had tax limitation in 2014 and would have had tax limitation in 2015 (had the current rules also applied in 2015) - AND
  • Have negative capital income in both 2014 and 2015 (e.g. your interest expenses exceeded your interest income). If the taxpayer is married, the spouses' capital expenses and capital income will be used as a basis. The spouses must collectively have at least one kroner more in capital expenses than in capital income.

The deduction for 2015 was calculated by comparing what your income after tax would have been in 2015 had the old rules still applied, with your income after tax calculated according to the new rules.To calculate what your income after tax would have been in 2015 had the old rules still applied, we used a stipulated amount for disability pension, which we have received from NAV.

If the drop in income after tax exceeds NOK 4,000, a tax deduction were given which is equal to the drop in income after tax minus NOK 4,000. The maximum tax deduction for 2015 was NOK 100,000. You cannot be granted a tax deduction that is greater than the sum of your income tax and National Insurance contributions.

If you are covered by the transitional rules, the Tax Administration will take this into account when calculating your tax for 2015, 2016 and 2017.

Please note that the tax deduction will be tapered for the 2016 and 2017 income years. For 2016 and 2017, the deductions will respectively amount to 67 percent and 33 percent of the tax deduction that was given in 2015.

If you are married, the allocation of capital income and capital expenses between you and your spouse could have a significant impact on the tax deduction you are entitled to. As a general rule, it would be beneficial to enter capital income in the tax return of the spouse who is disabled and has the lower income, and the capital expenses in the tax return of the spouse with the higher income

Spouse-equivalent cohabitants with disability benefit will be assessed as single persons

Spouse taxation for spouse-equivalent couples assumes a reporting obligation under the National Insurance Act. With effect from 2015, the Tax Act will not provide a legal basis for the spouse taxation of spouse-equivalents with disability benefit. This means that persons who were previously spouse-equivalent cohabitants in receipt of disability benefit will now be assessed as single persons. 

Exception:

However, spouse taxation may still be performed in certain cases (see Section 7 of the Regulations on tax deductions for disabled persons of 19 December 2014, No. 1860:

  • If you received disability pension and were a spouse-equivalent cohabitant during the 2014 income year, and you and your spouse-equivalent were assessed as spouses, spouse taxation will be continued for the 2015 income year in cases where:
    • You meet the conditions for a tax deduction pursuant to Sections 2 to 4 of the Regulations; and 
    • You are still spouse-equivalent cohabitants
  • Nevertheless, you can still ask to be assessed as single persons if you prefer.

Information on spouse taxation were shown on your provisional tax calculation for the income year 2015.

From 2016, all spouse-equivalent cohabitant that receive disability benefits will be assessed as single persons.

Special allowance for disability

The special allowance for disability was abolished with effect from 2015. If you received half the special allowance for disability in 2014 but did not receive disability pension from the National Insurance scheme, you can still receive a special allowance in accordance with a three-year transitional scheme. The condition is that you receive disability pension pursuant to legislation other than that pertaining to the National Insurance scheme because your earning capacity has been reduced by less than two thirds.

You cannot receive work assessment allowance from the National Insurance scheme at the same time. 

If you fulfil these conditions, you can receive a special allowance of up to NOK 1,000 for each month of the 2015 income year. For 2016, the special allowance amounts to NOK 667 per month and for 2017 to NOK 334 per month.

Supplementary benefit for spouses

Supplementary benefit for spouses from the National Insurance scheme has been abolished. If you received supplementary benefit for spouses as of 1 January 2015, you will however continue to receive it during the period for which you have been granted it. You can continue receiving it for up to ten years after 1 January 2015.

Background

Taxing disability benefit as salary makes it easier to jointly assess and combine salary and national insurance. If you have a job in addition to being in receipt of full or partial disability benefit, it makes it easier for you to predict your income, tax deductions and any change in your national insurance payments. See more about this at nav.no 

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