Income taxes

12 Months Ended

Dec. 31, 2019

13.	Income taxes:

(a)

Income tax expense is comprised of the following:

	2019			2018
Current tax expense	$	5,067,182		$	5,119,062
Deferred tax recovery		(3,440,121	)		(2,407,176	)
Total tax expense	$	1,627,061		$	2,711,886

The reconciliation of income tax computed at statutory tax rates to income tax expense, using a 27% (2018 – 27%) statutory rate, is:

	2019			2018
Net income before tax – Canada	$	6,889,481		$	5,957,089
Net income before tax – United States		2,950,064			9,770,714
Net income before tax – All jurisdictions	$	9,839,545		$	15,727,803
Tax expense at statutory income tax rates	$	2,656,677		$	4,259,890
Permanent differences		(50,235	)		503,964
Income attributable to non-controlling interest		(1,192,280	)		(2,245,809	)
Foreign income taxed at different rates		33,189			(26,042	)
Impact of change in tax rates		26,902			216,295
Other		152,808			3,588
Total tax expense	$	1,627,061		$	2,711,886

(b)

Deferred tax assets and liabilities:

The Company had the following deferred tax assets and liabilities resulting from temporary differences recognized for financial statement and income tax purposes.

	2019			2018
Deferred tax assets:
Property and equipment	$	2,684			356
Intangible assets		9,222,824			4,752,898
Finance related costs		224,986			375,182
Reserves		64,755			—
Share transaction costs		—			87,337
Stock-based compensation		767,228			534,926
Earn-out obligation		265,660			732,986
Deferred tax liabilities:
Property and equipment		(23,757	)		(40,357	)
Deferred consideration		(4,226	)		(18,388	)
Reserves		(83,206	)		(55,568	)
Unrealized foreign exchange		(20,610	)		(20,698	)
Finance related costs		(78,060	)		(68,938	)
Net deferred tax asset	$	10,338,278		$	6,279,736

Deferred tax assets by jurisdiction	2019			2018
Canada:
Deferred tax asset	$	—		$	87,343
Deferred tax liability		(101,822	)		(109,294	)
Net deferred tax asset (liability)	$	(101,822	)	$	(21,951	)
United States:
Deferred tax asset	$	10,548,137		$	6,396,341
Deferred tax liability		(108,037	)		(94,654	)
Net deferred tax asset (liability)	$	10,440,100		$	6,301,687

The realization of deferred income tax assets is dependent on the generation of sufficient taxable income during future periods in which the temporary differences are expected to reverse. If it is more likely than not that all or a portion of deferred tax assets will not be realized, a valuation allowance is provided against such deferred tax assets. In making such determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations.

As at December 31, 2019 and 2018, the Company had no valuation allowance against its deferred income tax assets. The Company currently does not have any unrecognized tax benefits or uncertain tax positions.

The Company currently files income tax returns in Canada and the US, the jurisdiction in which the Company believes that it is subject to tax. The Company is currently under audit by the IRS for its 2017 taxation year. Management is not aware of any other material income tax examination currently in progress by any taxing jurisdiction. Tax years ranging from 2017 to 2019 remain subject to Canadian income tax examinations. Tax years ranging from 2016 to 2019 remain subject to U.S. income tax examinations.