Income Taxes

12 Months Ended

Feb. 28, 2022

Income Tax Disclosure [Abstract]

Income Taxes

13. Income Taxes

The potential benefit of net operating losses for the Company have not been recognized in the consolidated financial statements because the Company cannot be assured that it is more likely than not that it will utilize the net operating losses carried forward in future years. The Company did not incur any income tax expense to the Internal Revenue Services for the years ended February 28, 2022 and 2021. Rent Pay incurred an income tax expense of $41,299 for the year ended February 28, 2022 (2021 – $nil). Given the short history of the Company and the uncertainty as to the likelihood of future taxable income, the Company has recorded a 100% valuation reserve against the anticipated recovery from the use of the net operating losses. The Company will evaluate the appropriateness of the valuation allowance on an annual basis and adjust the allowance as considered necessary. The Company’s US net operating loss is approximately $756,000 (2021 – $325,000) at February 28, 2022, which starts to expire in 2037.

The table below reconciles the US federal income tax rate to the effective rate for the years ended February 28, 2022 and 2021.

Income Tax at Statutory Rate	(21)%
Effect of Operating Losses	21%
Foreign Income Tax	18%
	18%

A reconciliation of the Company’s effective tax rate as a percentage of income before taxes and federal statutory rate for the years ended February 28, 2022 and 2021, is summarized as follows:

	2022 $			2021 $
Loss before income taxes		(368,851	)		(179,543	)
Income tax recovery at statutory rates		(77,000	)		(37,000	)
Permanent differences		—			—
Temporary differences		75,000			8,000
Change in statutory, foreign tax, foreign exchange rates and other		43,299			29,000
Income tax expenses		41,299			—

The unrecognized deferred tax assets include US net operating losses as follows:

	2022 $			2021 $
Deferred tax assets:
Non-capital losses available for future periods		159,000			68,000
Valuation allowance		(159,000	)		(68,000	)
Deferred income taxes recovered		—			—

The Company has US net operating losses available to offset future taxable income as follows:

2016	$	35,000
2017		78,000
2018		71,000
2019		6,000
2020		5,000
2021		130,000
2022		431,000
	$	756,000