Note 11. Income Taxes
At June 30, 2017, the Company has net operating loss carry forwards of $22,800,439 (2016 - $22,494,228) expiring between the years 2029 and 2037 which are available to reduce future taxable income. The tax effects of the significant components within the Company’s deferred tax asset (liability) at June 30, 2017 and 2016 are as follows:
|
United States |
|
2017 |
|
|
2016 |
|
||
|
Mineral properties |
|
$ |
(248,216 |
) |
|
$ |
3,702,787 |
|
|
Asset Retirement obligation |
|
|
428,572 |
|
|
|
494,807 |
|
|
Marketable securities |
|
|
— |
|
|
|
23,749 |
|
|
Stock options |
|
|
404,628 |
|
|
|
321,866 |
|
|
Net operating losses |
|
|
9,826,149 |
|
|
|
4,648,971 |
|
|
|
|
$ |
10,411,133 |
|
|
$ |
9,192,180 |
|
|
Valuation allowance |
|
|
(10,411,133 |
) |
|
|
(9,192,180 |
) |
|
Net deferred tax asset |
|
$ |
— |
|
|
|
— |
|
The income tax recovery differs from the amounts computed by applying statutory tax to pre-tax losses as a result of the following:
|
|
|
2017 |
|
|
2016 |
|
||
|
Income (Loss) Before taxes |
|
$ |
(7,555,020 |
) |
|
$ |
(5,342,172 |
) |
|
US Statutory tax rate |
|
|
34.00 |
% |
|
|
34.00 |
% |
|
Expected income tax (recovery) |
|
|
(2,568,707 |
) |
|
|
(1,816,338 |
) |
|
Non-deductible items |
|
|
171 |
|
|
|
664 |
|
|
Change in estimates |
|
|
(1,866,223 |
) |
|
|
— |
|
|
OCI impact |
|
|
— |
|
|
|
18,766 |
|
|
Change in Valuation Allowance |
|
|
1,219,341 |
|
|
|
1,796,908 |
|
|
Total income taxes (recovery) |
|
$ |
(3,215,418 |
) |
|
$ |
- |
|
|
Current tax expense (recovery) |
|
|
— |
|
|
|
— |
|
|
Deferred tax expense (recovery) |
|
|
(3,215,418 |
) |
|
|
— |
|
|
|
|
$ |
— |
|
|
$ |
— |
|
The potential tax benefits of net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.
Accounting for uncertainty for Income Tax
Income taxes are determined using assets and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. In addition, a valuation allowance is established to reduce any deferred tax asset for which it is determined that it is more likely than not that some portion of the deferred tax asset will not be realized.
Effective July 1, 2009, the Company adopted the interpretation for accounting for uncertainty in income taxes which was an interpretation of the accounting standard accounting for income taxes. This interpretation created a single model to address accounting for uncertainty in tax positions. This interpretation clarifies the accounting for income taxes, by prescribing a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements.
As at June 30, 2017 and 2016, the Company’s consolidated balance sheets did not reflect a liability for uncertain tax positions, nor any accrued penalties or interest associated with income tax uncertainties. The Company is subject to income taxation at the federal and state levels. The Company is subject to US federal tax examinations for the tax years 2010 through 2017. Loss carryforwards generated or utilized in years earlier than 2010 are also subject to examination and adjustment. The Company has no income tax examinations in process.