Note 13 - Income Tax

12 Months Ended

Dec. 31, 2018

Notes to Financial Statements

Income Tax Disclosure [Text Block]

13. Income tax

Income tax differs from the amounts that would be obtained by applying the statutory rate to the respective year’s earnings before tax. Differences result from the following items:

	2018			2017
Income tax expense using combined statutory rate of 26.5% (2017 - 26.5%, 2016 - 26.5%)	$	30,529		$	25,603
Permanent differences		785			359
Tax effect of flow through entities		(491	)		(186	)
Adjustments to tax liabilities for prior periods		(526	)		(1,712	)
Effects of changes in U.S. enacted tax rates		-			(2,514	)
Non-deductible stock-based compensation		1,528			1,095
Excess tax benefits related to stock-based compensation		(3,968	)		(5,749	)
Foreign, state and provincial tax rate differential		(2,863	)		4,914
Other taxes		(72	)		(242	)
Provision for income taxes as reported	$	24,922		$	21,568

Earnings before income tax by jurisdiction comprise the following:

     

	2018		2017
Canada	$	6,854	$	4,375
United States		108,348		92,240
Total	$	115,202	$	96,615

Income tax expense (recovery) comprises the following:

     

	2018			2017
Current
Canada	$	(554	)	$	(791	)
United States		23,615			29,966
		23,061			29,175
Deferred
Canada		403			(294	)
United States		1,458			(7,313	)
		1,861			(7,607	)
Total	$	24,922		$	21,568

The significant components of deferred income tax are as follows:

	2018			2017
Deferred income tax assets
Loss carry-forwards	$	1,567		$	1,580
Expenses not currently deductible		20,440			18,029
Stock-based compensation		1,312			1,602
Basis differences of partnerships and other entities		-			683
Allowance for doubtful accounts		2,018			1,596
Inventory and other reserves		113			191
		25,450			23,681
Deferred income tax liabilities
Depreciation and amortization		29,393			21,631
Basis differences of partnerships and other entities		166			-
Prepaid and other expenses deducted for tax purposes		1,689			1,423
		31,248			23,054
Net deferred income tax asset (liability) before valuation allowance		(5,798	)		627
Valuation allowance		779			793
Net deferred income tax asset (liability)	$	(6,577	)	$	(166	)

The recoverability of deferred income tax assets is dependent on generating sufficient taxable income before the

20

year loss carry-forward limitation. Although realization is

not

assured, the Company believes it is more likely than

not

that the deferred tax asset will be realized. The amount of the deferred tax asset considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carry-forward period are reduced.

The Company has gross operating loss carry-forwards as follows:

	Loss carry forward				Gross losses not recognized				Net
	2018		2017		2018		2017		2018		2017
Canada	$	1,638	$	2,167	$	-	$	-	$	1,638	$	2,167
United States		12,562		10,575		10,529		6,870		2,033		3,705

These amounts above are available to reduce future federal, state, and provincial income taxes in their respective jurisdictions. Net operating loss carry-forward balances attributable to the United States and Canada expire over the next

6

to

20

years.

Cumulative unremitted earnings of US and foreign subsidiaries approximated

$429,173

as at

December 31, 2018 (

2017

-

$353,976

). Income tax is

not

provided on the unremitted earnings of US and foreign subsidiaries because it has been the practice and is the intention of the Company to reinvest these earnings indefinitely in these subsidiaries.

The gross unrecognized tax benefits are

$148

(

2017

-

$148

). Of this balance,

$148

(

2017

-

$148

) would affect the Company’s effective tax rate if recognized. For the year ended

December 31, 2018,

there was

no

adjustment to interest and penalties related to provisions for income tax (

2017

-

nil

). As at

December 31, 2018,

the Company had accrued

$38

(

2017

-

$38

) for potential income tax related interest and penalties.

The Company’s significant tax jurisdictions include the United States and Canada. The number of years with open tax audits varies depending on the tax jurisdictions. Generally, income tax returns filed with the Canada Revenue Agency and related provinces are open for

three

to

four

years and income tax returns filed with the U.S. Internal Revenue Service and related states are open for

three

to

five

years.

The Company does

not

currently expect any other material impact on earnings to result from the resolution of matters related to open taxation years, other than noted above. Actual settlements

may

differ from the amounts accrued. The Company has, as part of its analysis, made its current estimates based on facts and circumstances known to date and cannot predict changes in facts and circumstances that

may

affect its current estimates.