7. Income Taxes

12 Months Ended

Apr. 30, 2016

Notes

7. Income Taxes

7.  Income Taxes

Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred liabilities are recognized for taxable temporary differences.  Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases.  Deferred tax assets are reduced by the valuation allowances when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Net deferred tax assets consist of the following components at April 30:

	2016	2015
Deferred tax assets:
Net operating loss carryforwards	$             770,400	$             615,900
Related party accrued interest	27,900	12,600
Accrued expenses – related parties	220,500	357,000
Valuation allowance	(1,018,800)	(985,500)
Net deferred tax assets	$                        -	$                        -

The income tax provision (benefit) differs from the amount of income tax determined by applying U.S. Federal, Canada corporate and British Columbia corporate income tax rates to pre-tax loss due to the following:

	Year Ended April 30,
	2016	2015
Book loss	$         (926,300)	$         (149,100)
Non deductible expenses	746,800	3,000
Gain on debt settlement	(41,600)	-
Related party accruals	66,700	3,400
Related party interest	19,700	8,100
Valuation allowance	134,700	134,600
Total	$                        -	$                        -

At April 30, 2016, the Company had net operating loss carry forwards of approximately $1,975,000 that may be offset against future taxable income through 2035.  No tax benefit has been reported in the accompanying consolidated financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.

The Company has adopted the Income Tax topic of FASB ASC 740, Accounting for Uncertainty in Income Taxes.  Included in the balance at April 30, 2016, are no tax positions for which the ultimate deductibility is uncertain. Because of the impact of deferred tax accounting, other than interest and penalties, the disallowance of the shorter deductibility period would not affect the annual effective tax rate but would accelerate the payment of cash to the taxing authority to an earlier period.

The Company’s policy is to recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses.

Due to the change in ownership provisions of U.S. federal and Canada and British Columbia income tax laws, operating loss carryforwards are potentially subject to annual limitations.  As a result of the change in ownership of Canyon Gold Corp., $1,502,000 of net operating loss carryforwards have been deemed to have been forfeit.  The net operating loss balance above reflects the forfeiture of this carryforward.