A friend of mine who works as a freelance IT consultant for European clients while living in Canada asked me if he is able to use his income to sponsor his parents next year. He earns around $90K per year from this work and has been declaring his income on his taxes for the past 2 years.
Is this considered worldwide income? If so, does it mean he will never be eligible to sponsor his parents as long as his clients are based outside Canada?
To clarify, his clients all wire him money directly to his Canadian bank account.
This type of income is called Income from Export of Goods or Services . And it is absolutely legal and normal for many IT service providers and other businesses.
Businesses registered in Canada usually have a Business account with a bank in Canada and as such International remittances to the account are in CAD/USD.
Your friend would be paying Corporate income tax and GST on behalf of the company he/she owns/operates.
All this is however the income to the Business entity which is different from income of an individual.
A part of that corporate income would then be paid out to the employee (your friend) by the company management(again your friend).This amount is considered personal income and would be reported on personal/Individual Tax forms(Notice Of Assessment).
CIC is interested only in the Individual NOA numbers for the purpose of checking Income eligibility for sponsorship
Net income in your Individual NOA is what you need to be looking at
Hope it helps