New rules concerning disability benefit and tax - FAQ

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The rules apply from 1 January 2015.

General questions

Question:

Is disability benefit different from disability pension?

Answer:

No. Disability pension from NAV was renamed disability benefit with effect from 1 January 2015. The conditions for being granted it remained the same. Disability benefits from pension providers other than NAV, such as the Norwegian Public Service Pension Fund (SPK), will continue to be called disability pension.

Question:

Is it only disability benefit from the National Insurance scheme that is to be taxed as salary?

Answer:

No. All disability benefits which were previously taxed as pension will be taxed as salary with effect from 1 January 2015.

Question:
Is disability benefit pensionable income?

Answer:

Disability benefit is not pensionable income, but you will accrue pension based on the income that the disability benefit replaces. You will receive pension credits up to and including the year in which you reach the age of 66 if you were born before 1962. If you were born later, you will accrue pension credits up to and including the year in which you reach the age of 62.

For more information on the basis for the pension accrual, contact NAV or visit nav.no.

Special allowance for disability

Question:

Can I still receive the special allowance for disability?

Answer:

The special allowance for disability was abolished with effect from 1 January 2015.

The increase in disability benefit from the National Insurance scheme will in principle compensate for abolition of the special allowance. A group of taxpayers who do not receive disability benefit from the National Insurance scheme, but who receive disability benefit under other legislation because their earning capacity has been reduced by less than two thirds previously received  half the special allowance. This group will not be compensated for the abolition of the special allowance because they do not receive disability benefit from the National Insurance scheme, and therefore do not benefit from the increase in benefit from the National Insurance scheme. For this group, a three-year transitional arrangement was therefore introduced.

The transitional rules may apply to you if:

  • You received half the special allowance for disability in 2014, but did not receive disability pension from the National Insurance scheme.
  • have a degree of disability of less than two thirds and receive disability benefit under legislation other than that relating to the National Insurance scheme. Examples of statutory schemes are the Norwegian Public Service Pension Fund and the pension scheme for nurses. Municipal pension schemes, individual disability insurance policies and company-paid pensions are examples of non-statutory schemes.
  • do not receive work assessment allowance
  • are under 67

The special allowance in 2015 amounted to NOK 1,000 per month or part thereof. For 2016, it will be NOK 667 and for 2017 it will be NOK 334.

Tax and tax calculation

Question:

Will the increased tax on disability benefit or disability pension mean I will receive less?

Answer:

NAV has increased disability benefit to compensate for the fact that the tax level has been raised. If you have another pension provider either instead of or as well as NAV, you must contact them in order to find out more about whether there have been any changes in the benefit you receive. The amount that each individual will receive will depend on the amount of National Insurance payments/disability benefit, any supplements, tax, deductions, etc. We are unfortunately unable to say whether a particular individual will receive more or less than before.

Question:

Will the tax deduction under the transitional rules be calculated automatically?

Answer:

If you fulfil the conditions for receiving a tax deduction under the transitional rule, this will be calculated for you automatically.

When you receive your tax notice in December, you will see whether the Tax Administration has calculated a tax deduction under the transitional rules.

Tax deduction cards and tax deductions

Question:

How can I find out how much tax I will have to pay? Should I use a percentage or table-based deduction?

Answer:

Every year in December, you will receive your tax notice for the following year. This sets out the information that was used to produce your new tax deduction card. It will also state the percentage or table-based deduction you should have. Table-based deductions will generally be used by your main employer (the one who pays you the most). If you have any other employers/pension providers, you should use percentage deductions.

Question:

Which figures will the Tax Administration use to calculate my tax deduction for 2016?

Answer:

To calculate tax deductions, the Tax Administration will use the last known tax settlement which concerns the income year two years previously. For example, we will calculate the tax deduction for 2017 using the information from the tax settlement notice for 2015.

Question:

As recipients of disability benefit are now to be taxed in the same way as the professionally active, will disabled persons now receive holiday pay in June in the same way as people who are in work?

Answer:

No. You will not earn entitlements to holiday pay on disability benefit. On the other hand, there will be no tax deduction on the benefit paid in June. If you have a job alongside your benefit, you will accrue entitlement to holiday pay on your income from employment. For more information on disability benefit, visit nav.no.

Question:

I receive 100 per cent disability benefit from NAV/the National Insurance scheme. I want to try working. What do I do about my tax deduction and tax deduction card?

Answer:

It is important that you check the basis for calculating your tax deduction in the tax settlement notice you receive in December and ensure that the information is correct. If you are about to start a job, you should change your tax deduction card so that you include both your disability benefit and your salary in the basis. If you have a table-based card, it is important to make sure that the table-based deduction is only used by one payer (your main employer) for the same period. Other payers must use the percentage deduction. If you wish to make any changes, you should change your tax deduction card.

Question:

I receive 100 per cent disability benefit from NAV. I want to try working. Do I have to tell both NAV and the Tax Administration?

Answer:

Yes. It is important to tell both NAV and the Tax Administration that the amount of disability benefit paid monthly is correct and to tell the Tax Administration if you have to change your tax deduction card.

Question:

How does NAV decide which tax deduction is to be used – table-based deduction or percentage deduction?

Answer:

NAV uses table-based deductions if you receive 100 per cent disability benefit, or if it is NAV that pays the highest benefit.

Question:

What if I have had a significant increase in my income from employment?

Answer:

You must then order a new tax deduction card. When you change your tax deduction card at skatteetaten.no, NAV will receive an update as soon as the change has been registered by the Tax Administration.

The transitional arrangement with tax deductions for disabled persons

Question:

Who do the transitional rules apply to?

Answer:

The transitional rules apply to recipients of disability pension who experience a sharp reduction in their income after tax as a result of the transition to disability benefit.

It will apply to people who:

  • 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 a tax limitation in 2014 and would have had a tax limitation in 2015 (had the current rules also applied in 2015) - AND
  • Had negative capital income in 2014 and will have such income again in 2015. In other words, your capital expenses (e.g. mortgage interest) exceed your capital income (e.g. bank deposits, taxable rental income, share dividends). If you are married, your combined capital income and capital expenses as well as those of your spouse will be used as a basis. You and your spouse must collectively have at least one kroner more in capital expenses than in capital income.

The tax deduction for 2015 is set as equal to the calculated reduction in income after tax minus NOK 4,000 (max. NOK 100,000).
The tax deduction will be tapered on a linear basis for the income years (67% of the tax deduction that were given for 2015) and 2017 (33% of the tax deduction that were given for 2015) and will lapse with effect from the 2018 income year.

The tax deduction is given against income tax and National Insurance contributions.

Question:

I have debts of NOK 1.2 million.  Will I be covered by the new transitional rules?

Answer:

We do not know. We are unfortunately unable to answer questions concerning individual circumstances. You can read more about the transitional rules above.

Withholding tax

Question:

How will people living abroad be affected? Is withholding tax affected by the new rules?

Answer:

Withholding tax at the rate of 15 percent will remain unchanged. The new rules do not affect withholding tax.

The tax-free income limit of NOK 60,000

Question:

I am 100% disabled and receive a small supplementary pension from KLP in addition to my pension from NAV. Will the supplementary pension from KLP be considered as income in relation to my tax-free income limit of NOK 60,000?

Answer:

No. Your pension from KLP will not be included in your amount limit of NOK 60,000 per year.

Combined disability benefit and salary

Question:

Why is disability benefit being taxed as salary?

Answer:

So that benefit recipients who can work won't have to comply with two sets of tax rules. Since 1 January 2015, both disability benefit and salary income have been taxed as salary income, rather than as pension income and salary income. The Norwegian Parliament's decision to increase the gross benefit to new disabled persons to 66% of the previous income up to six National Insurance base amounts requires the new disability benefit to be taxed as salary.

Adjustment of the National Insurance basic amount (G)

Question:

Will disability benefit be adjusted upwards annually with the adjustment to the National Insurance basic amount?

Answer:

Yes, it will be adjusted together with the adjustment to the National Insurance basic amount.

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