10. INCOME TAX

12 Months Ended

Dec. 31, 2012

Income Tax Disclosure [Abstract]

Note 10. INCOME TAX

The provision for income tax expense (benefit) is compromised of the following:

	2012			2011
Current tax, federal	$	921,247		$	852,316
Current tax, state		205,221			293,850
Current tax, foreign		—			—
Current tax, total		1,126,468			1,146,166
Deferred income tax, federal		(73,111	)		(20,000	)
Deferred income tax, state		—			—
Deferred income tax, foreign		—			—
Deferred income tax, total		(73,111	)		(20,000	)
Total	$	1,053,357		$	1,126,166

 The following table reconciles the income tax benefit at the U.S. Federal statutory rate to income tax benefit at the Company's effective tax rates.:

	2012			2011
Income (Loss) Before Taxes		(31,090	)		1,308,622
US Statutory tax rate		34.00	%		34.00	%
Expected income tax (recovery)		(10,571	)		444,931
Non-deductible items		(71,650	)		82,340
Change in estimates		758
Functional currency adjustments		(40,925	)		(116,981	)
Foreign Tax Rate Difference		217,576			114,131
Change in Valuation Allowance		752,948			311,357
Total income taxes (recovery)		848,136			835,778
Current Income Tax Expenses		1,126,468			1,146,166
Deferred Tax Expenses (Recovery)		(73,111	)		(20,000	)
Total income taxes (recovery)		1,053,357			1,126,166

Deferred taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes. Deferred tax assets (liabilities) at December 31, 2012 and 2011 are comprised of the following:

Canadian			2012		2011
		Non capital loss carry-forwards	2,119,669		1,741,452
		Intangible Assets	(118	)	(6,691)
		Fixed Assets	199,983		(46,604)
			2,319,534		1,688,157
		Valuation Allowance	2,319,534		1,688,157
		Net Deferred tax asset (liability)	—		-
	USA
			2012		2011
		Property and Equipment	272,062		219,000
		Net operating losses	108,969		-
		Stock Based Compensation	147,051		114,400
			528,082		333,400
		Deferred tax asset not recognized	235,971		114,400
		Net Deferred tax asset	292,111		219,000

The Company has non operating loss carry-forwards of approximately $8,435,655 (2011: $7,068,662) which may be carried forward to apply against future year income tax for Canadian income tax purposes, subject to the final determination by taxation authorities, expiring in the following years:

EXPIRY		2012 FS
	2014		455,480
	2015		723,880
	2026		934,586
	2027		839,285
	2028		752,034
	2029		1,035,876
	2030		1,081,844
	2031		1,245,677
	2032		1,366,993
	TOTAL		8,435,655

Accounting for uncertainty for Income Tax

Effective January 1, 2009, the Company adopted the interpretation for accounting for uncertainty in income taxes which was an interpretation of the accounting standard accounting for income taxes. This interpretation created a single model to address accounting for uncertainty in tax positions. This interpretation clarifies the accounting for income taxes, by prescribing a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements.

As at December 31, 2012 and 2011, the Company’s consolidated balance sheets did not reflect a liability for uncertain tax positions, nor any accrued penalties or interest associated with income tax uncertainties. The Company is subject to income taxation at the federal and state levels. The Company is subject to US federal tax examinations for the tax years 2008 through 2011. Loss carryforwards generated or utilized in years earlier than 2008 are also subject to examination and adjustment. The Company has no income tax examinations in process.

The operating income shown in the income statement is on a consolidated basis.   As shown in the income tax reconciliation in Note 10, net income and net loss has been segregated so that the financial statement reader can see that the Company has a significant net income before tax in the United States, and a significant loss before tax in 'foreign' jurisdictions.  On a consolidated basis, the net income earned in the United States is being offset by the losses in Canada.