The Company accounts for income taxes under the asset and liability approach prescribed by GAAP, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s consolidated financial statements or tax returns.

 

The Company’s income tax provision (benefit) is composed of the following:



A reconciliation of the income tax provision (benefit) computed by applying the Australian federal statutory rate of 30% to the Company’s income tax provision (benefit) is as follows (in thousands):







The components of deferred tax assets and (liabilities) are as follows (in thousands):









The Company has tax losses carried forward arising in Australia of $15,949,783  (2016: $15,621,491).  The benefit of these losses of $4,784,935 (2016:  $4,686,447) will only be obtained in future years if:

 



The Company has federal net operating tax losses in the United States of approximately $82,231,546 (2016:  $79,987,858).  The current year utilization carried back to prior years, is approximately $nil (2016: $nil). The 2000-2005 years are limited to  $403,194 per year as a result of a change in ownership of the one of the subsidiaries which occurred in January 2005. NOLs generated after this ownership change are not limited due to any known ownership changes.  If not utilized, the tax net operating losses will expire during the period from 2020 to 2036.



In addition to the above mentioned Federal carried forward losses in the United States, the Company also has approximately          $ 47,504,215 (2016: $46,216,143) of State carried forward tax losses, with expiry dates between June 2015 and June 2033.  A deferred income tax asset in relation to these losses has not been recognized as realization of the benefit is not regarded as probable.



In assessing the realizeability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the use of such net operating losses are allowed. Among other items, Management considers the scheduled reversal of deferred tax liabilities, tax planning strategies and projected future taxable income.  As of the current year end, the company does not believe the realizeablity of the deferred tax assets to be more likely than not.  As such, the company has a full valuation allowance offsetting the deferred tax asset.

 

The Company adopted the uncertainty provision of FASB ASC Topic 740, "Income Taxes" and has analyzed filing positions in all federal and state jurisdictions where it is required to file income tax returns, as well as all open tax years in this jurisdiction. Most uncertain tax positions relate primarily to timing differences and management does not believe any such uncertain tax positions will materially impact the Company's effective tax rate in future periods. The Company anticipates that no additional uncertain tax positions will be recognized within the next twelve months. Our policy is to recognize any interest and penalties related to the unrecognized tax benefits in income tax expense.  In our major tax jurisdictions, the earliest years remaining open to examination are as follows US - 6/30/1996 due to the usage of net operating losses from that period.  If recognized, these uncertain tax positions would impact the Company's effective income tax rate. The company currently has no unrecognized positions.