11.) Income Taxes
The following table reconciles the income tax benefit at the Canadian statutory rate to income tax benefit at the Company’s effective tax rates.
| 2017 | 2016 | |||||||
| Loss before income taxes | $ | (2,585,661 | ) | $ | (1,921,210 | ) | ||
| Statutory tax rate | 26.5 | % | 26.5 | % | ||||
| Expected income tax (recovery) | $ | (685,000 | ) | $ | (509,000 | ) | ||
| Non-deductible items | 276,000 | 143,000 | ||||||
| Change in valuation allowance | 409,000 | 358,785 | ||||||
| Total income taxes (recovery) | $ | - | $ | (7,215 | ) | |||
Deferred taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities and their respective tax bases for financial reporting purposes. Deferred tax assets as at March 31, 2017 and 2016 are comprised of the following:
| 2017 | 2016 | |||||||
| Net operating loss carry forwards | $ | 961,000 | $ | 599,000 | ||||
| Equipment and leasehold improvements | 40,000 | 35,000 | ||||||
| Convertible notes | 43,000 | - | ||||||
| Valuation allowance | (1,044,000 | ) | (634,000 | ) | ||||
| Net deferred tax asset | $ | - | $ | - | ||||
The Company has net operating loss carry forwards of approximately $3,626,000 (2016 - $2,262,000) which may be carried forward to apply against future year income for Canadian income tax purposes, subject to final determination by taxing authorities, expiring in the following years:
| Expiry | ||||
| 2029 | $ | 65,000 | ||
| 2030 | 83,000 | |||
| 2031 | 28,000 | |||
| 2032 | 81,000 | |||
| 2033 | 91,000 | |||
| 2034 | 242,000 | |||
| 2035 | 323,000 | |||
| 2036 | 1,349,000 | |||
| 2037 | 1,364,000 | |||
| Total | $ | 3,626,000 | ||
The deferred tax assets have not been recognized because at this stage of the Company’s development, it is not determined that future taxable profits will be available against which the Company can utilize such deferred tax assets. Tax years 2010 through 2017 remain open to examination by the taxing jurisdictions to which the Company is subject. The Company has not been notified by any taxing jurisdictions of any proposed or planned examination. The Company has non-refundable tax credits as at March 31, 2017 of $5,449 (2016 - $5,449) which expire in the year 2031.