17. Taxes
Income tax expense differs from the amounts computed by applying the statutory income tax rate to net loss before income taxes as follows:
| Year Ended August 31, | ||||||||||||
| 2017 | 2016 | 2015 | ||||||||||
| Net loss before income taxes | $ | (5,071,687 | ) | $ | (1,030,293 | ) | $ | (774,626 | ) | |||
| Tax rate | (1 | ) | (1 | ) | (1 | ) | ||||||
| Calculated income tax recovery | (1,391,061 | ) | (273,260 | ) | (205,497 | ) | ||||||
| Adjustment for deductible and non-deductible amounts | 1,130,327 | 48,858 | 46,994 | |||||||||
| Unrecognized benefit of non-capital losses | 260,734 | 224,402 | 158,503 | |||||||||
| Income tax recovery | $ | — | $ | — | $ | — | ||||||
(1) Canada – 26.50%; United States – 34%
Deferred Taxes
Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes. Significant components of the Company’s deferred tax assets are as follows:
| August 31, 2017 | August 31, 2016 | |||||||
| Deferred tax assets: | ||||||||
| Net operating loss carryforwards | $ | 1,784,000 | $ | 1,100,000 | ||||
| Temporary deductible differences (net) | 834,000 | (246,000 | ) | |||||
| Permanent difference | — | 249,000 | ||||||
| 2,618,000 | 1,103,000 | |||||||
| Valuation allowance | (2,618,000 | ) | (1,103,000 | ) | ||||
| Net deferred tax assets | $ | — | $ | — | ||||
Realization of deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. A valuation allowance was established based upon management’s inability to determine whether sufficient future profits will be generated.
The Company has approximately $6,579,000 of United States and Canadian net operating loss carryforwards expiring from 2024 to 2037.