| 8. | INCOME TAXES |
The Company has losses carried forward for income tax purposes to 30 June 2017. There are no current or deferred tax expenses for the year ended 30 June 2017 due to the Company’s loss position. The Company has fully reserved for any benefits of these losses. The deferred tax consequences of temporary differences in reporting items for financial statement and income tax purposes are recognized, as appropriate. Realization of the future tax benefits related to the deferred tax assets is dependent on many factors, including the Company’s ability to generate taxable income within the net operating loss carryforward period. Management has considered these factors in reaching its conclusion as to the valuation allowance for financial reporting purposes.
The provision for refundable federal income tax consists of the following:
| For the year ended 30 June 2017 $ |
For the year ended 30 June 2016 |
For the year ended 30 June 2015 |
||||||||||
| Deferred tax asset attributable to: | ||||||||||||
| Current operations | (10,017 | ) | 50,380 | 39,473 | ||||||||
| Contributions to capital by related parties | (16,218 | ) | (21,624 | ) | (21,624 | ) | ||||||
| Less: Change in valuation allowance | 26,235 | (28,756 | ) | (17,849 | ) | |||||||
| Net refundable amount | - | - | - | |||||||||
The composition of the Company’s deferred tax assets as at 30 June 2017 and 30 June 2016 are as follows:
| As at 30 June 2017 $ |
As at 30 June 2016 $ |
|||||||
| Net income tax operating loss carryforward | 1,061,987 | 1,091,450 | ||||||
| Statutory federal income tax rate | 34.00 | % | 34.00 | % | ||||
| Contributed rent and services | -20,35 | % | -18.32 | % | ||||
| Effective income tax rate | 0 | % | 0 | % | ||||
| Deferred tax assets | 144,938 | 171,173 | ||||||
| Less: Valuation allowance | (144,938 | ) | (171,173 | ) | ||||
| Net deferred tax asset | - | - | ||||||
The potential income tax benefit of these losses has been offset by a full valuation allowance.
As at 30 June 2017, the Company has an unused net operating loss carry-forward balance of approximately $426,287 that is available to offset future taxable income. This unused net operating loss carry-forward balance expires between 2024 and 2037.
During the year ended 30 June 2016, the Company received an assessment for penalties of $50,000 from the Internal Revenue Service regarding failure to file certain supplementary forms for the tax years 2007 to 2011. During the year ended 30 June 2017, the penalties were reversed.