Self-employed, Canadian resident, working in Barbados

Helping a friend with his taxes.

He works as a management consultant in Barbados, but is considered a Canadian resident, for an American Company.

Spousal income zero. Pays for a nanny in Barbados (around $11,000 per year); can you also claim expenses he incurred in Barbados for his employment i.e. vehicle (business portion), etc. Would the nanny fees be a business expense (straight-up expense) or what he would pay for the purpose of work (deduction)?

Can he claim an Overseas Employment Tax Credit? Are there any other credits I can claim for him since he's overseas?

Also, does he still have to contribute to CPP? Income under $20,000 and it's showing he needs to contribute to CPP, which amounts to a net owing.

Answer

If the spousal income is zero, nanny expenses cannot be deducted. If he is filing a Barbados return, he can carry forward the amounts from that return to the Canadian one. If he is only filing in Canada you can complete the return as though employment occurred in Canada, including any deductions and tax credits that would normally be allowed... keeping in mind that self-employed individuals have different allowable deductions from employees.

Any Canadian over the age of 18 who earns over $3500 must pay premiums to the CPP, with very few exceptions.

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