| 8. | INCOME TAXES |
Income taxes
The provision for income taxes differs from that computed at the Canadian and US combined corporate tax rate of approximately 33% for the year ended December 31, 2016 (Canadian and US corporate tax rate for the year ended December 31, 2015 - 33%) as follows:
| 2016 | 2015 | |||||||
| Net Loss for the year | $ | 358,984 | $ | 107,100 | ||||
| Expected Income Tax recovery | 125,644 | 37,485 | ||||||
| Tax effect of expenses not deductible for income tax | - | - | ||||||
| Change in derivative liabilities | 902 | - | ||||||
| Loss on conversion of debt | (52,921 | ) | - | |||||
| Amortization of debt discount | (851) | - | ||||||
| Change in valuation allowance | (72,775 | ) | (37,485 | ) | ||||
| Deferred tax assets, net of valuation allowance | - | - | ||||||
Deferred tax assets
Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
Net deferred tax assets consist of the following components as of December 31, 2016:
| Deferred Tax Assets - Non-current: | 2016 | 2015 | ||||||
| Tax effect of NOL Carryover | $ | 115,059 | $ | 42,284 | ||||
| Less valuation allowance | (115,059 | ) | (42,284 | ) | ||||
| Deferred tax assets, net of valuation allowance | $ | - | $ | - | ||||
At December 31, 2016, the Company had net operating loss carryforwards of approximately $328,740 (2015: $120,811) that may be offset against future taxable income from the year 2017 to 2037. No tax benefit has been reported in the December 31, 2016 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.