Income Taxes

12 Months Ended

Jun. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

12. Income Taxes

The Company has no income tax provision for the fiscal years ended June 30, 2022 and 2021. The statutory rate of 21% for U.S. federal income tax is the only applicable tax rate used for the fiscal years ended June 30, 2022 and 2021. The statutory rate differs from the Company’s current fiscal year provision due to the following:

	June 30, 2022 $			June 30, 2021 $
Net loss before taxes		33,539,962			41,760,064
Statutory rate		21	%		21	%
Computed expected tax recovery		7,043,392			8,769,613
Change in fair value of derivative liabilities		–			(4,127,612	)
Gain/loss on settlement of debt		–			3,923,489
Stock-based compensation		(18,643	)		(6,164,291	)
Net operating loss adjustment		(3,312,711	)		(172,322	)
Change in valuation allowance		(1,382,301	)		(1,625,555	)
162(m) adjustment		(2,264,757	)		–
Other permanent tax adjustments		(64,980	)		(603,322	)
Income tax provision		–			–

As of June 30, 2022, the Company had accumulated $80.4 million of net operating losses (NOL) carried forward to offset taxable income in future years. The Company currently has $7.0 of unused NOL’s that are set to begin to expire in 2036 to 2038, with the remainder of approximately $73.4 million having no expiration date.

The significant components of deferred income tax assets and liabilities at June 30 after applying enacted corporate income tax rates are as follows.

	2022 $			2021 $
Net operating losses carried forward		8,174,021			6,791,720
Valuation allowance		(8,174,021	)		(6,791,720	)
Net deferred tax asset		–			–

The Company has a sole uncertain tax position (“UTP”) for stock-based compensation for services included in open tax returns beginning with the fiscal year ended September 30, 2016. The Company intends to remedy the UTP with the required information forms issued in a timely matter prior to filing of the tax return for the fiscal year ended June 30, 2022.

The unrecognized tax benefits for the Company are as follows as of June 30:

	2022 $		2021 $
Unrecognized tax benefits, beginning of period		2,550,962		2,550,962
Increases – tax position in current period		6,164,291		–
Unrecognized tax benefits, end of period		8,715,253		2,550,962

Under Section 382 and 383 of the Internal Revenue Code of 1986, as amended, the Company’s ability to utilize carryforwards and other tax attributes such as foreign tax credits, in any taxable fiscal year may be limited if the Company experiences, or has experienced, an “ownership change.” A Section 382 “ownership change” generally occurs if one or more stockholders or groups of stockholders, who own at least 5% of the Company’s stock, increase their ownership percentage by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. Similar rules may apply under state tax laws. The Company may, in the future experience one or more additional Section 382 “ownership changes.

AMERICAN BATTERY TECHNOLOGY COMPANY

Notes to the Consolidated Financial Statements

For the fiscal years ended June 30, 2022 and June 30, 2021

The CARES Act was enacted March 27, 2020. Among the business provisions, the CARES Act provided for various payroll tax incentives, changes to net operating loss carryback and carryforward rules, business interest expense limitation increases, and bonus depreciation on qualified improvement property. Additionally, the Consolidated Appropriations Act of 2021 was signed on December 27, 2020, which provided additional COVID-19 relief provisions for businesses. The Company has evaluated the impact of both the Acts and has determined that any impact is not material to its financial statements.

The Company files U.S. income tax returns with varying statutes of limitations. The tax returns for fiscal years ended September 30, 2016, to June 30, 2022, remain open to examination due to the carryover of unused NOL carryforwards and tax credits. The Company is not under examination by any tax authority as of June 30, 2022.

The Company has incurred federal income tax and payroll tax penalties of approximately $121,000 for the fiscal year ending June 30. 2021. The expense has been presented within the consolidated statements of operations, general and administrative expenses.