14. Income Taxes

The Company’s income tax provision has been calculated as follows:

		2018			2017
Loss before income taxes	$	(3,894,016	)	$	(2,212,481	)
Expected income tax recovery at the statutory rate of 21% (2017-26.5%)		(817,743	)		(774,368	)
Foreign tax rate differences		(213,459	)		188,061
Foreign exchange effect on deferred tax assets		51,968			(6,577	)
Permanent differences		637,593			104,173
Change in valuation allowance		341,641			488,711
Provision for income taxes	$	-		$	-

Deferred tax assets and liabilities

The tax effects of temporary differences that give rise to significant components of the deferred income tax assets and deferred income tax liabilities are presented below:

		2018			2017
Net operating loss carry forwards	$	1,157,180		$	686,863
Financing costs		143,260			209,074
Depreciable and amortizable assets		(141,159	)		(78.297	)
Total gross deferred income tax assets		1,159,281			817,640
Less: valuation allowance		(1,159,281	)		(817,640	)
Total deferred income tax assets	$	-		$	-

As at December 31, 2018 and 2017, the valuation allowance was due to the history of losses generated. The valuation allowance is reviewed periodically and if the assessment of the more likely than not criteria changes, the valuation allowance is adjusted accordingly.

Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company computes tax asset benefits for net operating losses (“NOL”) carried forward.

The Company has US NOL available for carryforward of $294,428 ($401,675 CAD) (2017-$78,903; $98,988 CAD) a portion of which, $78,903, expires in the year 2037 and the balance indefinitely and Canadian NOL available for carryforward of $4,366,717 ($5,957,322 CAD) (2017-$2,513,031; $3,152,717 CAD CAD) which expire in the years 2026 through 2038.

In addition, the Company has capital losses carried forward totaling $102,619 ($139,999 CAD). These losses can be carried forward indefinitely and can be used only against capital gains in Canada.