If I work overseas(Middle East)and get paid in US dollars from a Canadian company,do I still pay full taxes?

Question

I will be working in Dubai on a rotation 30/30.I will be paid in US dollars from a Canadian company.I will be consluting for them so eveything I make I get in full.It is up to me to save enough for taxes.Do I need to pay taxes in full or is there a tax break.I hear a couple of different stories form people.

Answer 1

If you meet certain conditions, you may qualify for an Overseas Employment Tax Credit. These credits are available to people who are Canadian residents, or deemed residents, employed by a specified employer who is also resident in Canada, and who work is certain qualifying activities. One of the qualifying activites is the exploration or exploitation of petroleum products.

The effect of the credit is an up to 80% reduction in the Federal Taxes payable on your first 100,000 CAD income. It wouldn't matter if you were paid in American dollars.

Check out CRA publication IT-497R4 for more information, and talk to your employer about it. Also contact the International Tax Services Office at 1-800-267-5177.

This would not apply at all if you were self-employed.

Answer 2

If you are a consultant, then you are going to be billing the company on a regualr basis.  Yes you need to pay taxes on the full amount, but you do have the ability to deduct certain expenses

Home Office

Travel expenses

Hotel Fees

You will need to fill out a business schedule when you do your income tax return.