15. Income tax benefit

 

The following table summarizes the current and deferred portions of the net income tax benefit:

 

 

The following is a reconciliation of the income taxes calculated at the Canadian enacted statutory rate of 26% for the years ended December 31, 2017, 2016 and 2015, respectively, to the provision for income taxes in the consolidated statements of operations:

 

The tax effect of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2017 and 2016 are presented below:

 

 

The following table summarizes the net deferred tax position as of December 31, 2017 and 2016:

 

 

As of December 31, 2017, we have recorded a valuation allowance of $151.4 million. This amount is comprised primarily of provisions against available Canadian and U.S. net operating loss carryforwards. Some of these loss carryforwards may be subject to limitation on their use. In assessing the recoverability of our deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax asset will be realized. The ultimate realization of the deferred tax assets is dependent upon projected future taxable income in the United States and in Canada and available tax planning strategies.

 

Tax benefits related to uncertain tax positions taken or expected to be taken on a tax return are recorded when such benefits meet a more likely than not threshold. Otherwise, these tax benefits are recorded when a tax position has been effectively settled, which means that the statute of limitation has expired or the appropriate taxing authority has completed their examination even though the statute of limitations remains open. Interest and penalties related to uncertain tax positions are recognized as part of the provision for income taxes and are accrued beginning in the period that such interest and penalties would be applicable under relevant tax law until such time that the related tax benefits are recognized. As of December 31, 2017, we have not recorded any tax benefits related to uncertain tax positions.

 

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 was signed into law making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017, new limitations on the deduction of net business interest expense, and a new base erosion and anti-abuse tax. After preliminary estimates based on guidance available as of the date of this filing, the interest expense limitation and base erosion and anti-abuse tax are not expected to have a material impact to cash taxes in future tax years. The primary item impacting the tax rate for the twelve months ended December 31, 2017 is the amount related to the remeasurement of deferred tax assets and liabilities, based on the rates at which they are expected to reverse in the future for $28.5 million. In addition, the rate was further impacted by $9.9 million related to goodwill impairment. These items were offset by $34.6 million related to a net decrease to our valuation allowances, consisting primarily of decreases of $34.1 million in the United States due to the remeasurement of deferred tax assets and a decrease of $0.5 million in Canada related to income. In addition, the rate was further impacted by $20.1 million relating to operating in higher tax rate jurisdictions, $2.4 million relating to foreign exchange and $0.1 million relating to other permanent differences.

 

As of December 31, 2017, we had the following net operating loss carryforwards that are scheduled to expire in the following years: