I wish to make use of my maximum tax deduction. How much should we then transfer from my spouse's tax return to my tax return?

A description is first presented here of how this is done. This is followed by some examples to illustrate this.

The provisional tax settlement enclosed with the tax return has been calculated based on the pre-completed tax returns. The most favourable method of assessment is chosen - either separate assessment under class 1 or joint assessment under class 2. We suggest that you use the difference between your maximum tax deduction and the tax deduction used in the provisional tax calculation as a starting point. The tax rate on capital income is 25 %. If you split the difference of 25 and multiply by 100, you get the capital income which results in the tax corresponding to the difference. However, when an amount is transferred from the tax return of one spouse to that of the other, the allocation of the tax will change. This means that a slightly larger amount must be transferred in order to make full use of the tax deduction. We recommend that you use the tax calculation program. You can use this program to find an allocation of capital income which, where possible, will result in full utilisation of the maximum tax deduction.

If you do not have sufficient capital income for the spouse with the lower income to make full use of their maximum tax deduction, you do not need to perform any calculations. All you have to do then is transfer the amounts that can be transferred.

If you do not wish the spouse who has the lower income to pay any tax, you must ensure that you find the amounts that must be transferred in order for the sum of the tax and national insurance contributions of the spouse who has the lower pension not to exceed the limit for underpaid tax which is not collected. The limit is NOK 99 (including interest).

See examples of how married couple Kari and Per allocate interest income in their tax returns and how this gives them lower overall tax. See the enclosure at the bottom of the page.

Example showing that, by transferring capital income, spouses can make use of a greater proportion of the tax deduction, but not all

Kari and Per have drawn an old-age pension from the National Insurance scheme with a retirement percentage of 100 all year and have capital income.

In connection with the tax calculation, the assessment method (either class 1E or class 2F) is chosen which is most favourable for the spouses collectively based on the allocation of capital income and expenses which the spouses have chosen.

Separate assessment under class 1:

Topic Kari Per
Pension - item 2.2.1 NOK 123,000 NOK 179,000
Interest income - item 3.1.1 NOK 5,000 NOK 15,000
Total NOK 128,000 NOK 194,000
Calculated tax NOK 16,418 NOK 31,798
- Tax deduction NOK 16,418 NOK 29,880
=Tax NOK 0 NOK 1,918

Calculation of the capital income that Kari is short of in order to utilise her maximum tax deduction:

Maximum tax deduction NOK 29,880
Utilised tax deduction NOK 16,418
Difference NOK 13,462

NOK 13,462 in tax on general income corresponds to capital income of NOK 13,462: 25 x 100 = NOK 53,848. In this example, they only have NOK 15,000 in capital income to transfer from Per's tax return to Kari's tax return, so it is simple in this case. The entire amount should be transferred.

If the spouses transfer all their interest income to Kari's tax return, the tax will be:

Topic Kari Per
Pension - item 2.2.1 NOK 123,000 NOK 179,000
Interest income - item 3.1.1 NOK 20,000 NOK 0
Total NOK 143,000 NOK 179,000
Calculated tax NOK 20,168 NOK 28,048
- Tax deduction NOK 20,168 NOK 28,048
= Tax NOK 0 NOK 0

 

The spouses do not have sufficient capital income to enable Kari to make use of her maximum tax deduction. She still has NOK 0 in tax after the tax deduction. Per has however reduced his tax  by NOK 1,918 and he also has NOK 0 in tax. The lower the lowest pension, the greater the proportion of the capital income that it is beneficial to transfer to the spouse with the lowest income.

Example showing that spouses can utilise the tax deduction by transferring capital income and capital expenses

Kari has drawn an old-age pension from the National Insurance scheme with a retirement percentage of 100 all year and has capital expenses, while Per has drawn an old-age pension from the National Insurance scheme with a retirement percentage of 100 all year and has capital income.

Separate assessment under class 1:

Topic Kari Per
Pension - item 2.2.1 NOK 153,000 NOK 210,000
Interest income - item 3.1.1 NOK 0 NOK 10,000
Interest income - item 3.3.1 NOK 5,000 NOK 0
Total NOK 148,000 NOK 220,000
Calculated tax NOK 20,773 NOK 37,769
- Tax deduction NOK 20,773 NOK 26,024
= Tax NOK 0 NOK 11,745

Calculation of the capital income that Kari is short of in order to make use of her maximum tax deduction:

Maximum tax deduction NOK 29,880
Utilised tax deduction NOK 20,773
Difference NOK 9,107

NOK 9,107 in tax on general income corresponds to capital income of NOK 9,107: 25 x 100 = NOK 36,428.

If they had transferred the interest income of NOK 10,000 from Per to Kari and calculated the tax using a simple tax calculation, the result will be that she utilises NOK 23,273 of her maximum tax deduction of NOK 29,880. 

If the spouses transfer the interest expenses of NOK 5,000 to Per's tax return and the interest income of NOK 10,000 to Kari's tax return, the tax will be:

Topic Kari Per
Pension - item 2.2.1 NOK 153,000 NOK 210,000
Interest income - item 3.1.1 NOK 10,000 NOK 0
Interest income - item 3.3.1 NOK 0 NOK 5,000
Total NOK 163,000 NOK 205,000
Calculated tax NOK 24,523 NOK 34,019
Tax deduction NOK 24,523 NOK 26,024
= Tax NOK 0 NOK 7,995

Kari utilises NOK 24,523 of her maximum tax deduction, while Per reduces his tax by NOK 3,750. If you have capital incomes or expenses which have not been pre-completed in the tax return, you can choose freely between you who should declare these items in their tax return.

See examples of how the married couple Kari and Per allocate interest income in their tax returns and how this gives them lower tax overall