I would want typos pointed out. I wouldn’t want my name on or associated with a document with errors.
“I could give him another day to see if he catches himself. It would mean a bit of delay but we will survive.”
Why delay the inevitable? I’d be under the assumption that he would have caught them already if he sent it to you to look over. Rip off the bandaid. 
It’d help to know the relationship but I’d probably be honest and just ask. Something along the lines of “I’m happy to edit for content” (or whatever your agreement is and what the author is expecting) “but, if I catch typos, would you like me to note them?”
If it needs correcting then correct it. If we suck up playing dodgeball we can suck up typos too.
A misplaced comma can mean a lot of trouble in a legal document. Just saying. 
If you’re reviewing the document, then review it. You do no favors by avoiding typos, because you think it’s “nicer.” I do wonder why anyone would review a draft and then fret over this- or ask for a review and only expect limited feedback.
Just be diplomatic.
Plus OP said collaborative- so this impact’s his reputation, as well?
I wouldn’t just correct the errors, in case the writer will work off a saved copy of his own.
JMHO.
In my world (a professional editor before I retired) editing meant content and grammar, including typos.
As someone said upthread, there should be a way to figure out how you can both work off a document to track changes, even if it means changing the format of the document.
It is not the final version. He is still working on it. There’s some chance he may catch them himself. I could wait a day or two until he sends me the final version or point them out now so that he can include the corrections in the final version. If that’s all there is to it, I can send it out before the weekend.
I use the Oreo cookie/ sandwich method.
Start with the good…this is a great article. I love the way you expressed…
Put the critique in the middle…I noticed a few minor typos…I do that as well…
End with the good…I loved reading it…
Ask what level of correction your colleague wants. I’m a writer and want the whole thing, even if the corrections are ruthless, but not everyone feels that way.
Exactly. Who gets upset about someone trying to help them? Pointing out typos is no big deal. Just be nonchalant, e.g.
Inform him of the typos.
It’s kind of funny that in the OP about typos, there is a typo. 
“I would still stick with the maya54 suggestions, unless these are the kind of typos that we don’t all agree are typos. The Oxford comma, for example, or just commas in general that are used more sparingly by some writers than others. I can’t imagine not pointing out incorrectly spelled words.”
Need to point out that the Oakhurst Dairy case settles that the Oxford comma is not open to question. It’s a must do.
You refer to the document a few times as a draft. A draft is for editing and suggestions. All you are doing by not offering your edits is trying to protect their feelings of being edited or your own for being forward. I think most would rather be edited than have a piece of work published/shared with typos.
I should add that I make typos frequently. I would be horrified to send a professional document of some kind out with a typo. I would welcome the heads up. If an employee took offense at his work being corrected, I would wonder if he really belonged at an organization that takes pride in their work.
Depends on the context. My wife gave me a Christmas letter to review a few years after we were married. I marked it up the same way I would have if someone gave me the document in the office. Quite a bit of red ink.
The glare I got when I gave it to her let me know I misread the situation.?
That’s a pretty different situation obviously. But I agree to ask what kind of review is wanted is probably a good idea. Personally I would want my draft marked up to correct any errors, I hate having anything go out under my name with mistakes.
Except on CC, because I usually type on my phone and it’s anonymous.?
I got the final version and errors remained. I was hoping he may catch them himself. I wasn’t going to let the typos stand. I wasn’t sure if I should give him chance to correct or let the efficiency take it over and correct them right there and then. I didn’t and we are losing a day.
Making the typos was his mistake; noticing but not fixing them was your mistake.
Some people just don’t value clean documents. An error or two? No biggie. These people may also have typos in their emails, incomplete sentences, etc. Do you note communication between you and this person to be error free in emails and such? This feels a little like a lousy excuse but also in this age of texting some people have gotten very relaxed in the printed word.
I’ve told this story before but: I have degrees in a physical science and in English and I frequently proofread scientific/social science texts for others. In my previous job I proofed manuscripts for my boss, a MD/PhD/MBA who was all about those initials after his name. He could not differentiate between “lose” and “loose” (which is unfortunate, given that he often wrote about the economics of weight loss)
You can see where this is going. He became furious with me when I changed all of his "loose"s to "lose"s. When I tried to explain, he insisted I was wrong because I didn’t have a MD/PhD/MBA after my name. He never made any of my suggested changes.
He was equally mad when the proofs came back from the publisher with “lose” instead of “loose.”
Loser.