Tax regulations and forms for agriculture, forestry, fur farming and reindeer husbandry

Income from forestry may vary widely from one year to another. The timber account is an equalisation scheme for income from forestry in a sole proprietorship. You can choose to recognise this year’s profit from the forestry business directly in the income year, or the income may be entered into a timber account. Losses must always be entered into the timber account.

If the balance is positive, a minimum of 20 percent of the balance must be recognised as income. If the balance is negative, a minimum of 20 percent must be claimed as a deduction. A negative balance in a timber account may always be deducted from this year’s profit from forestry.​ The provisions on profit and loss accounts (see section 14-45 of the Taxation Act) also apply to timber accounts when applicable.

The form for timber accounts can be found in RF-1177, part XIX to part XXI. Here, you'll find a specification of income and expenses that should be entered in the timber account and income and expenses that should be recognised directly in the income year.

Discontinuity is the general rule when a regular farm and forestry farm is transferred within the family. Presuming that the conditions are met, the recipient’s input value is set to ¾ of the market value. In principle, the provisions on continuity in the event of inheritance and gifts also apply to gift sales. In the event of a transfer of a regular farm or forestry farm as a gift sale, continuity does not apply to the input value for the real property, even if the transfer is tax-free and there is no gain and loss settlement.

For other tax positions linked to the enterprise, continuity generally applies. This means that the gift recipient taking over the giver’s enterprise will assume the rights and duties according to the provisions on risk-free return, negative calculated personal income, negative balance, empty positive balance, positive and negative profit and loss account, conditional tax-exempt gains, loss for tax purposes and other tax positions linked to the enterprise.

A timber account is a tax position linked to the enterprise, not to the asset, and it therefore follows the enterprise.

When completing form RF-1177, item 532, last year’s balance on the timber account must be included. In cases where agriculture has been transferred with continuity, the previous owner’s timber account balance from the previous year under item 542 must be the balance brought forward under item 532 for the new owner.

It's possible that the previous owner has income from forestry in the transfer year. In such cases, you may choose between direct income recognition and entering it into the timber account in the enterprise’s accounts (see section 14-81, subsection 1, of the Taxation Act). If the previous owner does not recognise income directly, in practice, it's the new owner that must enter the income into the timber account in form RF-1177 at the end of the year.

Note! The option to choose does not apply to expenses/losses. The expenses linked to forestry must be entered into the timber account (see section 14-81, subsection 1, second sentence, of the Taxation Act.

In case the transfer is a gift or a gift sale of forest that is not an enterprise, the transferor must keep the timber account with them.

The regulations on profit and loss account also apply to timber accounts when applicable. As a rule, it implies that you must create a timber account for each municipality and each enterprise. One operating unit may extend across several municipalities. You may have several operating units in a municipality and/or in an enterprise. If the forestry enterprise is naturally connected to one operating unit across the municipal border, you may use one timber account. In that case, the income must be divided between the municipalities by completing the form RF-1034.

From and including the 2018 income year, you can submit several timber accounts in the tax return. You must use item 530 in form RF-1177 "Landbruk" (Agriculture - in Norwegian only) to retrieve timber accounts for several municipalities.

This year’s profit from the forestry business not directly recognised in the income year must be entered into a timber account. Expenses incurred in order to earn forestry income, including depreciations and expenses for ordinary maintenance, are included in the calculation of this year’s profit.

Sales of fixed assets in balance group D are depreciated in the balance or directly recognised as income. Profit and loss account and negative balance is in itself a scheme that provides deferred tax. Such balances are entered as income or deduction according to the ordinary provisions in the Taxation Act. Remuneration from realisation must not be entered into a timber account. Timing of a remuneration from realisation may be deferred by entering it into the profit and loss account or by depreciating it on the account for the fixed asset.