12. INCOME TAXES
The Company follows ASC 740. Deferred income taxes reflect the net effect of (a) temporary difference between carrying amounts of assets and liabilities for financial purposes and the amounts used for income tax reporting purposes, and (b) net operating loss carry-forwards. No net provision for refundable Federal income tax has been made in the accompanying statement of loss because no recoverable taxes were paid previously. Similarly, no deferred tax asset attributable to the net operating loss carry-forward has been recognized, as it is not deemed likely to be realized.
The provision for refundable federal income tax at 35% consists of the following for the periods ending:
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| June 30, |
|
| June 30, |
| ||
Federal income tax benefit attributed to: |
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|
|
|
|
| ||
Net operating loss |
| $ | 160,587 |
|
| $ | 72,142 |
|
Valuation |
|
| (160,587 | ) |
|
| (72,142 | ) |
Net benefit |
| $ | - |
|
| $ | - |
|
The cumulative tax effect at the expected rate of 35% of significant items comprising our net deferred tax amount is as follows:
|
| June 30, |
|
| June 30, |
| ||
Deferred tax attributed: |
|
|
|
|
|
| ||
Net operating loss carryover |
| $ | 336,934 |
|
| $ | 176,347 |
|
Less: change in valuation allowance |
|
| (336,934 | ) |
|
| (176,347 | ) |
Net deferred tax asset |
| $ | - |
|
| $ | - |
|
As at June 30, 2017, the Company had an unused net operating loss (“NOL”) carry-forward of approximating $962,669 that is available to offset future taxable income; the loss carry-forward will start to expire in 2033. The utilization of these NOLs may become subject to limitations based on past and future changes in ownership of the Company pursuant to Internal Revenue Code Section 382.