|
13. |
Income taxes: |
Income tax (recovery) expense varies from the amounts that would be computed by applying the expected Canadian and provincial statutory income tax rate of 26% (2016 – 26%, 2015 – 26%) to loss before income taxes as shown in the following table:
|
|
|
2017 |
|
|
2016 |
|
|
2015 |
|
|||
|
Computed recoveries at Canadian federal and provincial tax rates |
|
$ |
(8,000 |
) |
|
$ |
(5,980 |
) |
|
$ |
(4,095 |
) |
|
Change in valuation allowance |
|
|
9,210 |
|
|
|
6,897 |
|
|
|
2,482 |
|
|
Investment tax credits earned |
|
|
(1,393 |
) |
|
|
(1,500 |
) |
|
|
(1,220 |
) |
|
Tax attributes expired/utilized |
|
|
683 |
|
|
|
617 |
|
|
|
2,851 |
|
|
Non-deductible expenditures |
|
|
594 |
|
|
|
569 |
|
|
|
977 |
|
|
Financing fees in equity |
|
|
— |
|
|
|
(531 |
) |
|
|
— |
|
|
Effect of tax rate increases |
|
|
(1,444 |
) |
|
|
— |
|
|
|
— |
|
|
Other |
|
|
350 |
|
|
|
(72 |
) |
|
|
(995 |
) |
|
Income tax (recovery) expense |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Deferred income tax assets and liabilities result from the temporary differences between the amount of assets and liabilities recognized for financial statement and income tax purposes. The significant components of the Company’s net deferred income tax assets are as follows:
|
|
|
2017 |
|
|
2016 |
|
||
|
Deferred income tax assets |
|
|
|
|
|
|
|
|
|
Scientific research and experimental development pool |
|
$ |
25,056 |
|
|
$ |
22,823 |
|
|
Investment tax credits |
|
|
22,872 |
|
|
|
22,483 |
|
|
Non-capital losses |
|
|
13,645 |
|
|
|
7,800 |
|
|
Depreciable assets |
|
|
5,360 |
|
|
|
4,163 |
|
|
Deferred financing fees |
|
|
578 |
|
|
|
1,020 |
|
|
Other |
|
|
114 |
|
|
|
126 |
|
|
Less - valuation allowance |
|
|
(67,625 |
) |
|
|
(58,415 |
) |
|
Net deferred income tax assets |
|
$ |
— |
|
|
$ |
— |
|
The realization of deferred income tax assets is dependent upon the generation of sufficient taxable income during future periods in which the temporary differences are expected to reverse. The valuation allowance is reviewed on a quarterly basis and if the assessment of the “more likely than not” criteria changes, the valuation allowance is adjusted accordingly. A full valuation allowance continues to be applied against deferred income tax assets as the Company has assessed that the realization of such assets does not meet the “more likely than not” criteria.
At December 31, 2017, the Company has unclaimed tax deductions for scientific research and experimental development expenditures of $92,799 (2016 – $87,781) with no expiry.
At December 31, 2017, the Company has $21,066 (2016 – $20,160) of investment tax credits available to offset federal taxes payable and $7,560 (2016 – $7,624) of provincial tax credits available to offset provincial taxes payable in the future.
At December 31, 2017, the Company has non-capital losses, net of uncertain tax positions, carried forward for tax purposes, which are available to reduce taxable income of future years of approximately $50,536 (2016 – $29,999).
The investment tax credits and loss carry forwards expire over various years to 2037.
As of December 31, 2017, the total amount of the Company’s unrecognized tax benefits of uncertain tax positions were $6,350 (2016 – $6,350). If recognized in future periods, the unrecognized tax benefits would affect the Company’s effective tax rate. The Company recognizes potential accrued interest and penalties related to unrecognized tax benefits within the income tax provision. Interest and penalties have not been accrued at December 31, 2017 as none would be owing on the unrecognized tax benefits due to the availability of non-capital losses to shelter any potential taxable income arising thereon.
The Company does not currently expect any significant increases or decreases to these unrecognized tax benefits within 12 months of the reporting date.
The Company files income tax returns in Canada and the United States, the jurisdictions in which the Company believes that it is subject to tax. In jurisdictions in which the Company does not believe it is subject to tax and therefore does not file income tax returns, the Company can provide no certainty that tax authorities in those jurisdictions will not subject one or more tax years (since the inception of the Company) to examination. Further, while the statute of limitations in each jurisdiction where an income tax return has been filed generally limits the examination period, as a result of loss carry-forwards, the limitation period for examination generally does not expire until several years after the loss carry-forwards are utilized. Other than routine audits by tax authorities for tax credits and tax refunds that the Company claims, the Company is not aware of any other material income tax examination currently in progress by any taxing jurisdiction. Tax years ranging from 2002 to 2016 remain subject to Canadian income tax examinations.