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Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
a. Income tax (expense) recovery is comprised of the following:
Year Ended December 31,
202120202019
Current income tax expense$(437)$(292)$(1,373)
Deferred income tax recovery (expense)953 (137)1,955 
Income tax recovery (expense)$516 $(429)$582 
Current income tax expense for the years ended December 31, 2021, 2020 and 2019 arose from the operations of Zymeworks Biopharmaceuticals Inc., the Company’s wholly owned subsidiary in the United States, and from the withholding taxes paid by the Company abroad in 2021, 2020 and 2019.
b. Income tax (expense) recovery varies from the amounts that would be computed by applying the expected Canadian income tax rate of 27% (2020: 27%, 2019: 27%) to loss before income taxes as shown in the following tables:
Year Ended December 31,
202120202019
Computed taxes at Canadian tax rate$57,368 $48,627 $39,453 
Non-deductible expenses(1,026)(9,191)(13,020)
Difference between domestic and foreign tax rate(345)185 104 
Effect of change in tax rates— — (10)
Adjustments to prior year(33)(441)(39)
Change in valuation allowance(60,260)(48,411)(29,057)
Share issuance costs in equity2 5,385 3,578 
Change in recognition and measurement of tax positions— — (2,391)
Changes due to SR&ED and research credits5,096 4,067 2,200 
Other(286)(650)(236)
Income tax recovery (expense)$516 $(429)$582 
c. Deferred income tax assets and liabilities result from the temporary differences between the amounts of assets and liabilities recognized for financial statement and income tax purposes. The significant components of the deferred income tax assets and liabilities are as follows:
December 31,
2021		December 31,
2020
Deferred tax assets:
Non-capital losses carried forward$123,554 $71,566 
Deferred revenue8,894 8,894 
Share issue costs6,058 8,365 
Property and equipment1,219 1,423 
Intangible assets2,911 1,352 
Research and development deductions and credits35,401 27,994 
Contingent consideration421 366 
Stock options4,330 2,038 
Operating lease liability7,871 1,837 
Other351 280 
$191,010 $124,115 
Deferred tax liabilities:
Property and equipment(1,085)(1,296)
IPR&D(4,760)(4,760)
Operating lease right-of-use assets(6,685)(1,181)
Outside basis difference in foreign subsidiary(1,573)(1,178)
$(14,103)$(8,415)
176,907 115,700 
Less: valuation allowance(175,410)(115,155)
Net deferred tax assets$1,497 $545 
Deferred tax asset$3,070 $1,723 
Deferred tax liability(1,573)(1,178)
Net deferred tax assets$1,497 $545 
The realization of deferred income tax assets is dependent upon the generation of sufficient taxable income during future periods in which the temporary differences are expected to reverse. The valuation allowance is reviewed on a quarterly basis and if the assessment of the “more likely than not” criterion changes, the valuation allowance is adjusted accordingly.
d. At December 31, 2021, the Company has net operating losses carried forward for tax purposes in Canada, which are available to reduce taxable income of future years of approximately $457.6 million (December 31, 2020: $265.1 million) expiring commencing 2035 through 2041.
At December 31, 2021, the Company also has unclaimed tax deductions for scientific research and experimental development expenditures of approximately $81.4 million (December 31, 2020: $69.5 million), with no expiry. At December 31, 2021, the Company has approximately $15.8 million (December 31, 2020: $11.7 million) of investment tax credits available to offset Canadian federal and provincial taxes payable expiring commencing in 2029 through 2041.
e. The investment tax credits and non-capital losses for income tax purposes expire as follows:
Expiry dateInvestment tax creditsNon-capital losses
20291,169 — 
20301,242 — 
20311,758 — 
2032— — 
2033— — 
2034229 — 
20351,068 3,961 
2036862 24,578 
20371,587 10,625 
20381,485 — 
20391,818 81,253 
20401,903 146,611 
20412,686 190,578 
$15,807 $457,606 

f. A reconciliation of total unrecognized tax benefits for the years ended December 31, 2021, 2020, and 2019 are as follows:
Year Ended December 31,
202120202019
Balance, beginning of year$3,063 $3,063 $672 
Increases related to prior year tax positions— — — 
Increases related to current year tax positions— — 2,391 
Balance, end of year$3,063 $3,063 $3,063 
Included in the balance of unrecognized tax benefits at December 31, 2021, 2020 and 2019 are potential benefits of $nil that, if recognized, would affect the effective tax rate on income from continuing operations. Recognition of these potential benefits would result in a deferred tax asset in the form of net operating loss carry-forward, which would be subject to a valuation allowance based on conditions existing at the reporting date.
The Company recognizes interest expense and penalties related to unrecognized tax benefits within the provision for income tax expense on the consolidated statements of loss and comprehensive loss.
The Company currently files income tax returns in Canada and the United States, the jurisdictions in which the Company believes that it is subject to tax. Further, while the statute of limitations in each jurisdiction where an income tax return has been filed generally limits the examination period, as a result of loss carry-forwards, the limitation period for examination generally does not expire until several years after the loss carry-forwards are utilized. Other than routine audits by tax authorities for tax credits and tax refunds that the Company has claimed, management is not aware of any other material income tax examination currently in progress by any taxing jurisdiction. Tax years ranging from 2006 to 2021 remain subject to Canadian income tax examinations. Tax years ranging from 2018 to 2021 remain subject to U.S. income tax examinations.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in response to the COVID-19 pandemic. The CARES Act makes qualified improvement property eligible for 15-year cost-recovery and 100% bonus depreciation. The enactment of the CARES Act did not result in any significant impact on the Company's 2021 and 2020 tax provision.