NextSource Materials Inc.

14.

Income Taxes

Below is a reconciliation of the United States income tax provision at the statutory rate of

35%

to the actual provision:

	June 30, 2017			June 30, 2016
Net Loss		(3,999,358	)		(1,633,713	)
Statutory rate		35.00	%		35.00	%

Expected income tax recovery		(1,399,775	)		(571,800	)
Tax rate changes and other adjustments		(147,580	)		(703,720	)
Stock based compensation		278,200			116,020
Change in tax benefits not recognized		1,260,325			1,415,360
Non-deductible expenses		8,830			(255,860	)
Income tax recovery		-			-

Deferred Tax

The Company

’s future income tax assets and liabilities as at

June 30, 2017

and

2016

are as follows:

	June 30, 2017			June 30, 2016
Property, plant and equipment		31,780			29,230
Non-capital losses – United States		7,041,230			7,562,070
Exploration expenditures		13,046,610			11,259,980
Other deductible temporary differences		6,890			6,890
Deferred tax assets		20,126,511			18,858,170
Less: valuation allowance		(20,126,511	)		(18,858,170	)
Net deferred tax liabilities		-			-

NextSource Materials Inc.

Notes to Consolidated Financial Statements

For the years ended

June 30, 2017

and

2016

(Expressed in US Dollars)

. Income Taxes (Continued)

The United States net operating loss carry forwards expire as noted in the table below. The remaining deductible temporary differences

may

be carried forward indefinitely. Deferred tax assets have

not

been recognized in respect of these items because it is

not

probable that future taxable profit will be available against which the group can utilize the benefits there from.

The Company's United States net operating losses expire as follows:

Expiration Year	Tax Loss $
2025		4,130
2026		29,460
2027		283,870
2028		909,180
2029		341,250
2030		3,435,600
2031		3,998,670
2032		5,264,970
2033		4,956,930
2034		3,642,800
2035		4,880,240
2036		4,549,970
2037		4,978,979
Operating loss carry forwards		37,276,037