Annual report pursuant to Section 13 and 15(d)

Note 14 - Income Taxes

v3.23.1
Note 14 - Income Taxes
 12 Months Ended
Dec. 31, 2022
Notes To Financial Statements [Abstract]  
Income taxes
14.
Income taxes:
(a)
Income taxes

For the years ended December 31, 2022 and 2021, the total comprehensive loss is as follows:

 

 

 

December 31,
2022

 

 

December 31,
2021

 

Loss attributed to US foreign operations

 

$

(36,615

)

 

$

(52,447

)

Loss attributed to Canadian operations

 

 

(5,208

)

 

 

(12,907

)

Loss before income taxes

 

$

(41,823

)

 

$

(65,354

)

 

(b)
Tax rate reconciliation

Major items causing the Company’s income tax rate to differ from the statutory rate of approximately 26.5% (December 31, 2021 – 26.5%) are as follows:

 

 

 

Year ended December 31, 2022

 

 

Year ended December 31, 2021

 

Net loss

 

$

(41,823

)

 

$

(65,354

)

Statutory Canadian corporate tax rate

 

 

26.5

%

 

 

26.5

%

Computed expected tax recovery

 

$

(11,083

)

 

$

(17,319

)

Non-deductible permanent differences

 

 

1,376

 

 

 

3,707

 

Change in valuation allowance

 

 

10,821

 

 

 

15,274

 

Foreign tax rate differential

 

 

(466

)

 

 

(683

)

Prior year true-up adjustments

 

 

(703

)

 

 

(951

)

Other

 

 

55

 

 

 

(28

)

 

 

$

—

 

 

$

—

 

 

(c)
Significant components of deferred taxes

The tax effects of temporary differences that give rise to significant portions of the unrecognized deferred tax assets are presented below:

 

 

 

December 31,
2022

 

 

December 31,
2021

 

Net operating losses carried forward

 

$

60,092

 

 

$

49,286

 

Research and development expenditures

 

 

5,023

 

 

 

5,032

 

Property, equipment, and other intangible assets

 

 

7,264

 

 

 

7,261

 

Research and development tax credits

 

 

4,968

 

 

 

4,202

 

Financing costs

 

 

873

 

 

 

1,580

 

Right-of-use assets

 

 

2

 

 

 

40

 

Total deferred tax assets

 

 

78,222

 

 

 

67,401

 

Valuation allowance

 

 

(78,222

)

 

 

(67,401

)

Net deferred tax asset

 

$

—

 

 

$

—

 

 

The valuation allowance at December 31, 2022 was primarily related to net operating loss carryforwards that, in the judgment of management, are not more-likely than-not to be realized. In assessing the realizability of deferred tax assets, management considers whether it is more-likely-than-not that all or some portion of the deferred assets will not be realized. This ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which those deductible temporary difference become deductible. Based on the history of losses and projections for future taxable income, management believes that it is not more-likely than-not that the Company will realize the benefits of these deductible temporary differences (e.g. deferred tax assets).

The Company has certain deductible Canadian research and development expenditures that have not been deducted for tax purposes, totaling $19.0 million, that can be carried forward indefinitely. The Company also has Canadian non‑refundable federal and provincial investment tax credits of approximately $3.0 million which are available to reduce future federal taxes payable and begin to expire in 2023, as well as non‑refundable US research and development tax credits of approximately $2.6 million which are available to reduce future US taxes payable and begin to expire in 2038.

In addition, the Company has Canadian non-capital loss carryforwards of $216.9 million. To the extent that the non-capital loss carryforwards are not used, they begin to expire in 2026. The Company also has a US non-capital loss carryforward of $1.0 million. To the extent that the non-capital loss carryforwards are not used, they begin to expire in 2034.

The Company files income tax returns with Canada and its provinces and territories. Generally, we are subject to routine examinations by the Canada Revenue Agency ("CRA"). Income tax returns filed with various provincial jurisdictions are generally open to examination for periods of four to five years subsequent to the filing of the respective return.

The Company also files income tax returns for our U.S. operations and subsidiary with the U.S. federal and state tax jurisdictions. Generally, we are subject to routine examination by taxing authorities in the U.S. jurisdictions. There are presently no examination of our U.S. federal and U.S. state returns. We believe that our tax positions comply with the applicable tax law.