For many the month of April is synonymous with spring and the first trip out in the boat. However, April is also the month you have to file your tax return! Many of us file our tax return simply by leaving the tax return as it is in Altinn and don’t give it a second thought (filing by silent acceptance). In many situations this works out just fine. But don’t forget that you have an obligation to give the tax authorities all relevant information regarding your financial situation, and that the tax return is the document you should use to fulfill this obligation.
What information are you actually obliged to give? When should you include additional information? How much additional information should you include and it what shape and form should you give it?
The questions are numerous and the answers are not always evident. What is clear though is that if you don’t fulfil your obligation to give information this can have serious consequences for you. You can be charged with additional tax and the tax authorities can make use of the right to change your tax assessment to your disadvantage for 10 years after the relevant assessment year. In more serious cases fines and imprisonment can also be imposed.
The obligation to give information
The main rule is written in the tax law and states “The person that is required to give information according to this chapter should act attentive and loyal. He must contribute in such a way that his tax liability in due time is clarified and fulfilled. He must also notify the authorities if there are any mistakes in the assessment or in the tax imposed”. But what does this actually imply? Briefly it can be summarized as follows:
- You are required to give both correct and complete information in your tax return. There are few excuses for not fulfilling this obligation. Special circumstances related to your personal situation are usually not relevant.
- Just as you have a duty to give information, the authorities have a duty to examine. Thus it is vital that you give sufficient information regarding the actual circumstances related to your personal situation so that they can evaluate if they need to collect additional information.
- In addition to the specific tax return form there are also other mandatory forms that must be included in the tax return. It can be a good idea to also use the non-compulsory forms as they are created by the tax authorities for the purpose of obtaining all relevant information.
- The obligation to give information mainly relates to the actual circumstances. You are free to interpret the law and express how you think the rules should be understood (needless to say that the tax authorities might not agree with you!)
How should you complete your tax return in order to fulfill your obligation to give information?
The question is then: How should you complete your tax return in order to fulfill your obligation to give information?
Some information, like for example salary, deposits in banks and similar should have been reported directly to the tax authorities and is visible on the pre-printed tax return. In relation to these items there is not a lot to do besides checking that the numbers are correct (and amend them if they are not).
In addition the tax return has some questions on the last page that you need to answer. Below we will take you through these questions and try to give you some guidance in relation to how you best can answer them.
Gains from lottery/betting, heritage or gifts
Did you win money from a lottery or betting in 2015? Or did you perhaps receive a gift or inherit? Did the value exceed NOK 100 000? If yes, you have to remember to give information about this in your tax return.
When it comes to gains from the lottery or betting most of these will not be subject to tax due to an explicit exemption in the tax law. However, the tax authorities require that you provide information about them. Please be aware that it is only the lotteries/betting games explicitly mentioned in the tax law that are tax free - gains from other lotteries/betting games are subject to tax
The following lotteries/betting games are exempted:
- Games arranged by Norsk Tipping AS, for example Lotto, Viking Lotto, Tipping and Oddsen.
- Totalisator games comprised by the totalisation law (Rikstoto).
- Distributions according to the lottery law for example Quicklotteri and bingo
- Gambling and lotteries in another EEA country which is similar to games or lotteries that are legal in Norway and which is subject to governmental supervision and control in the home country.
- Public available initiatives arranged by mass media.
Starting from the income year 2014 Norway does not impose inheritance tax. Still the tax authorities require that you inform them if you have inherited or received a gift of more than NOK 100 000. This has to do with the tax authorities duty to verify information. It also has to do with the fact that a person that inherits in some situations takes over the economic position of the testator thus the value of the inherited object can have an effect on future stipulation of gains.
You are obliged to give information about name, date of birth and address of testator/donator, type of inheritance/gift and the value of it.
Income, wealth and/or debt outside of Norway
When doing one’s tax return it is a common mistake to only include income sourced in Norway - typically salary earned and paid out in Norway, property in Norway etc. However, as long as you are considered as tax resident in Norway you are actually obliged to give information about your worldwide income and wealth in the Norwegian tax return.
You might think it’s unfair that income from abroad also can be subject to tax in Norway. Please then be aware that although you have to inform about this income it doesn’t necessarily mean that the income will be taxed in Norway. The tax system is created in such a way that basically the same income should not be taxed twice.
Should you be in a situation where more than one country has the right to tax your income you will find yourself in a so-called “double tax situation”. One example of such a situation would be when a person resident in Norway owns a holiday house in Spain. Another example would be that a person resident in Norway has worked in China for a period of time and received salary there. How this situation should be handled in the tax return is not obvious and it is extremely important that you provide enough information regarding this in order for the tax authorities to issue a correct tax assessment.
If you have income or wealth outside of Norway that you believe should not be taxed in Norway you should give information about this income in your tax return and at the same time state that you believe it should not be taxed. This way you will fulfill your duty to give information and the tax authorities has the possibility to ask for additional information if they want to evaluate further.
What kind of information and how much information you need to give will to a large extent depend on the type of income/wealth/debt you have. If you know which post to fill in and how your double tax situation should be solved, you must fill in your tax return accordingly. In many situations it can be a good idea to provide some additional information about actual circumstances and how you have reasoned just because these rules are complex and it is easy to get things wrong here.
If you are uncertain about your tax liability and how the double tax situation should be solved, you can of course express this in your tax return, but please make sure that your facts and numbers are clearly stated. You must give enough information to enable the tax authorities to evaluate whether or not the income/wealth should be taxed in Norway and whether or not the relevant deduction can be deducted in your taxable income in Norway.
For certain types of income/wealth there are specific forms that you are obliged to submit and the negligence of submitting these forms can quickly put you in a position where you are in breach of your obligation to give information. The tax authorities can also conclude that you are in breach if the forms have not been filled in correctly or sufficiently. Some of these forms are very difficult to fill in correct. In our opinion they are so difficult to fill in correct that it can be argued that the tax authorities’ duty to guide you must be extended beyond normal situations and that a breach of the information duty should only be established in special situations. Please note that in these situations the additional information that you provide in your tax return becomes even more crucial.
Information about your civil status
One of the last questions in the tax return is regarding your civil status. Do you have a cohabitant? Do you and your cohabitant have a common child? What you answer here can effect what amount of mortgage and interests on mortgage you can deduct in your tax return.
Many people think that mortgage and interests on mortgage can be divided freely between cohabitants in the same way as married couples. This is not correct though. The main rule is that cohabitants should be assessed separately. This means that although they have a joint house mortgage they should give information about their part of the debt and corresponding debt interest in their tax return. However, there are some exceptions from this if you are considered a so-called “notifiable cohabitant”. “Notifiable cohabitant” is defined in the National Insurance Act and is related to receiving benefits from the National Insurance.
Notifiable co-habitants can share income and deductions in the same way married couples can. If one of the co-habitants is an a wealth tax position, it can be beneficial to transfer parts of the wealth or debt to the other. If you think you are a notifiable cohabitant you should give information about this.
It is not possible to give complete information about what type of information you should give in the tax return. In short one can say that it is not required to give absolutely all information. What is important is that you give enough information so that the tax authorities can evaluate your situation in relation to the tax legislation, or that you give enough information so that the tax authorities is made aware that they need to collect more information in order to properly evaluate the situation. The more complicated the situation is the more important it is to give correct and necessary information. If you do not comply with the obligation to give information this can have serious consequences for you - such as additional tax, extended possibility to amend your assessment to your disadvantage and in more serious cases fines and imprisonment.
A good guideline is therefore: If you are in doubt whether it is necessary to give the information or not, give it! Then it is up to the tax authorities to consider the relevance of the information.
This blogpost is written by Tone Eid.
Jeg startet min arbeidskarriere med personbeskatning i Skattedirektoratet. Senere har jeg fått erfaring fra to andre revisjons- og rådgivningsfirmaer samt som intern skatterådgiver i Aibel, før jeg fant veien til PwC.
Enkelte ganger så dukker det opp spørsmål, nye lovregler, endret praktisering, rettssaker eller enkeltvedtak som virkelig engasjerer. Når jeg blir engasjert så har jeg et formidlingsbehov. Du kan være trygg på at kommer det et blogginnlegg fra meg, så står det en engasjert skatteadvokat bak!