Quarterly report pursuant to Section 13 or 15(d)

Income Taxes

v3.20.4
Income Taxes
9 Months Ended
Dec. 31, 2020
Income Tax Disclosure [Abstract]  
Income Taxes
20. Income Taxes

The majority of the Company’s revenues from international sales are invoiced from and collected by our U.S. entity and recognized as a component of income before taxes in the United States as opposed to a foreign jurisdiction. Net income (loss) before taxes for the Nine months ended December 31, 2020 by U.S. and foreign jurisdictions was as follows:


    December 31,
2020
$
    December 31,
2019
$
 
             
United States     1,831,428       15,116,552  
Foreign     (2,203,385 )     (4,080,411 )
                 
Net income (loss) before taxes     (371,957 )     11,036,141  

The following table reconciles the income tax expense (benefit) at the statutory rates to the income tax (benefit) at the Company’s effective tax rate. 


    December 31,
2020
$
    December 31
2019
$
 
             
Net income (loss) before taxes     (371,957 )     11,036,141  
Statutory tax rate     21%       21%  
                 
Expected income tax expense (recovery)     (78,111 )     2,317,590  
Permanent differences and other     502,105       300,596  
Foreign tax rate difference     37,233       (41,777 )
Change in valuation allowance     (461,227 )      (2,576,409 )
                 
Income tax provision     -       -  
                 
Current     -       -  
Deferred     -       -  
                 
Income tax provision     -       -  

As of the date of this filing, the Company has completed delinquent tax filings and management believes that the active entities within the group are now current with statutory corporate income tax filings. Certain of the amounts presented above are based on estimates and what management believes are prudent filing positions. The actual losses available could differ from these estimates upon assessment and review by taxation authorities.


On December 22, 2017, the US federal tax legislation commonly known as the Tax Cut and Jobs Act (TCJA) was signed into law. The TCJA made major changes to the Internal Revenue Code, including reducing the US federal income corporate tax rate from 35% to 21% for tax years beginning after December 31, 2017. Under the TCJA, for net operating losses (“NOLs”) arising in taxable years beginning after December 31, 2017, the TCJA limits a US corporate taxpayer’s ability to utilize NOL carryforwards to 80% of the taxpayer’s taxable income (as modified by the CARES Act, as described below). In addition, NOLs arising in taxable years beginning after December 31, 2017 can be carried forward indefinitely, with no carryback. NOLs generated in tax years beginning before January 1, 2018 are not subject to the taxable income limitation and generally has a 20-year carryforward. On March 27, 2020 the President signed into law the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act). The CARES Act introduced various tax changes, including granting a five-year carry back period for NOLs arising in taxable years beginning after December 31, 2017 and before January 1, 2021, temporary suspension of the 80% taxable income limitation on the use of NOLs arising in tax years beginning after December 31, 2017 but before January 1, 2021.


The Company estimates that is has accumulated estimated net operating losses of approximately US$17.7 million of which US$14.2 million arose from the US and which does not begin to expire until 2033. In addition, the Company estimates that it has $1.9 million in losses available in the United Kingdom. Historical losses in the U.S., are subject to limitations on use due to deemed changes in control for tax purposes. This impacts the timing and opportunity to use certain losses.