Tax implications of one year of high income?

[PharmaStache]

What tax benefits (or other benefits) are lost when income increases dramatically?  Household income usually 180k, would be 380k for one year only (farmland is being sold).  So far I can think of the child tax benefit being lost at that income level.  Anything else I'm missing?  Other than the obvious tax being paid on that income :)

[Leseratte]

Yes, child benefits will go away, maybe carbon tax credit?

One thing to remember: you have to have Cash for the taxes twice! One time for the year you incur the taxes and the second time for the year after, as cra orders you to make installments payments according to last year's taxes (Yes, you will get it back eventually, but it is still a lot of money - ask me how I know🤣)

[iris lily]

You are not Medicare age, but when you are Medicare age the amount you pay for Medicare goes up when there are large increases in income.

We had an unplanned, unwelcome surprise, a stock sale last year and our income went up to over $300,000. Medicare increase followed for a year. UGG.

[PharmaStache]

Yes, child benefits will go away, maybe carbon tax credit?

One thing to remember: you have to have Cash for the taxes twice! One time for the year you incur the taxes and the second time for the year after, as cra orders you to make installments payments according to last year's taxes (Yes, you will get it back eventually, but it is still a lot of money - ask me how I know🤣)

I expect that this happened to you, which is worrying!  I was told that they will ask for installments the next year but that I will be able to explain to them that it was a one time land sale and then they will not be required.  Is this not the case?  Or was your situation different? 

[Kmp2]

This is not tax advice, but when this happened to me, I just didn't pay the tax installments the CRA requested. It was fine as I didn't owe any money for that year when my taxes were all finalized. This was 10 years or so ago though, and if you do end up owing taxes they might ask why you didn't pay your installments.

[RetiredAt63]

I also had one year of unusually high income and the CRA wanted instalments for the next year based on the assumption that the new high income would continue.  I actually did them, but because my taxes deducted at source were not enough once I retired.  I ran a simulation of what my next year's taxes would be and made the instalment payments based on my calculations, not theirs.  I'm still doing it all these years later.

If your deductions at source are enough, then you don't need to do the instalments, they will owe you that money back.  But they do like instalments if you don't have enough deducted at source.  They don't like big lump sum payments.

[PharmaStache]

Thanks, that makes me feel better!
The spouse claiming the money will definitely not owe taxes the next year.  This is a once time only event.