Annual report pursuant to Section 13 and 15(d)

INCOME TAXES

v3.19.2
INCOME TAXES
12 Months Ended
Mar. 31, 2019
Income Tax Disclosure [Abstract]  
Income Tax Disclosure [Text Block]
13.
INCOME TAXES
 
Components of net loss before income taxes consists of the following:
 
 
 
March 31
 
 
March 31
 
 
 
2019
 
 
2018
 
 
 
$
 
 
$
 
U.S.
 
 
(8,849,294
)
 
 
(12,281,398
)
Canada
 
 
(1,707,307
)
 
 
(2,344,392
)
 
 
 
(10,556,601
)
 
 
(14,625,790
)
Net loss for the year before recovery of income taxes
 
 
(10,556,601
)
 
 
(14,625,790
)
Statutory rate
 
 
25.30
%
 
 
34.04
%
Expected income tax (recovery)
 
 
(2,670,579
)
 
 
(4,978,619
)
Tax rate changes and other basis adjustments
 
 
(525,472
)
 
 
1,748,278
 
Stock-based compensation
 
 
340,861
 
 
 
524,412
 
Difference in Foreign Tax Rates
 
 
-
 
 
 
-
 
Accretion
 
 
890,797
 
 
 
184,414
 
Change in fair value
 
 
(85,487
)
 
 
659,458
 
(Gain) loss on mark to market re-evaluation
 
 
(518,274
)
 
 
-
 
Share premium
 
 
-
 
 
 
425,497
 
Non-deductible expense
 
 
83,578
 
 
 
339,296
 
Net DTA acquired
 
 
-
 
 
 
-
 
Change in valuation allowance
 
 
2,484,576
 
 
 
1,097,264
 
Recovery of income taxes
 
 
-
 
 
 
-
 
 
The following deferred tax assets have not been recognized. Deferred tax reflects the tax effects of temporary differences that gave rise to significant portions of deferred tax assets and liabilities and consisted of the following:
  
 
 
March 31,

2019
 
 
March 31,
2018
 
 
 
$
 
 
$
 
Equipment
 
 
70,650
 
 
 
70,350
 
Share issue costs
 
 
-
 
 
 
510
 
SR&ED pool
 
 
844,001
 
 
 
690,320
 
Other
 
 
1,022,309
 
 
 
535,510
 
Non-capital losses – Canada
 
 
2,796,469
 
 
 
2,515,170
 
Net operating losses – U.S.
 
 
5,911,320
 
 
 
4,331,850
 
Valuation allowance
 
 
(9,502,006
)
 
 
(7,017,430
)
 
 
 
1,142,743
 
 
 
1,126,280
 
Intangibles and other
 
 
(1,142,743
)
 
 
(1,126,280
)
 
 
 
-
 
 
 
-
 
 
The Company has non-capital losses in its Canadian subsidiary of approximately $10,552,713, which will expire between 2032 and 2039. The Company has net operating losses in the U.S. parent Company of $14,190,773, and net operating losses in the U.S. subsidiary of approximately $14,190,773, 
which will expire in 2038. Certain tax attributes are subject to an annual limitation as a result of the acquisition of the US subsidiary, which constitutes a change of ownership as defined under IRC Section 382.
 
Income taxes are provided based on the liability method, which results in deferred tax assets and liabilities arising from temporary differences. Temporary differences are differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements that will result in taxable or deductible amounts in future years. The liability method requires the effect of tax rate changes on current and accumulated deferred taxes to be reflected in the period in which the rate change was enacted. The liability method also requires that deferred tax assets be reduced by a valuation allowance unless it is more likely than not that the assets will be realized.
 
The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company recognizes interest accrued on uncertain tax positions as well as interest received from favorable tax settlements within interest expense. The Company recognizes penalties accrued on unrecognized tax benefits within general and administrative expenses. As of March 31, 2019, the Company had no uncertain tax positions.
 
In many cases the Company’s uncertain tax positions are related to tax years that remain subject to examination by tax authorities. The following describes the open tax years, by major tax jurisdiction, as of March 31, 2019:
 
United States – Federal
2015 – present
United States – State
2015 – present
Canada – Federal
2014 – present
Canada – Provincial
2014 – present