Income tax

12 Months Ended

Jun. 30, 2022

Income tax

Income tax

11.Income tax

The Company income tax expense is determined as follows:

	2022		2021
Statutory income tax rate	26.15	%	26.37	%
	$		$
Net income (loss) before income taxes	(104,390)		4,384
Expected income tax expense	(27,297)		1,156
Difference in foreign tax rates	(75)		(106)
Tax rate changes and other adjustments	1,437		(17)
Share based compensation	2,596		961
Other non deductible expenses	(42)		167
True-up of prior years	1,194		38
Scientific Research and Experimental Development (SR&ED)	87		(155)
Business acquisition costs	470		877
Sec 481(a) adjustment	136		129
Gain on consideration payable	(591)		(1,037)
Stock options deduction revaluation adjustment	4,239		2,287
Goodwill impairment	23,756		—
Earn-out amortization	209		—
Currency translation adjustment and other adjustments	—		(165)
Changes in tax benefits not recognized	271		(33)
Income tax expense	6,390		4,102
The Company’s income tax expense is allocated as follows:	$		$
Current tax expense	3,980		1,935
Deferred income tax expense	2,410		2,167
Income tax expense	6,390		4,102

11.Income tax (continued)

The following table summarizes the components of deferred tax assets (liabilities):

	June 30,	June 30,	July 1,
	2022	2021	2020
	$	$	$
Deferred income tax assets and liabilities
Non-deductible reserves - Canadian	125	317	78
Non-deductible reserves - USA	5,319	4,712	1,885
SR&ED investment tax credits, net of 12(1)(x)	2,001	1,457	1,459
Property and equipment - Canadian	(83)	(212)	(228)
Property and equipment - USA	(2,349)	(1,493)	(499)
Deferred development costs	(548)	(608)	(735)
Intangible assets including goodwill - Canadian	(89)	(82)	(66)
Intangible assets including goodwill - USA	(42,242)	(41,967)	(2,798)
Non-capital losses carried forward - USA	15,140	5,159	4,074
Non-capital losses carried forward - Canadian	480	—	94
Capital losses carried forward and other - Canadian	3	3	272
Right of use assets net of obligations - Canadian	27	30	6
Right of use assets net of obligations - USA	239	148	76
Share issuance costs - Canadian	834	1,146	262
Acquisition costs and other - USA	404	421	—
Stock options - USA	4,096	8,260	—
163J interest	3,593	—	—
Interest rate swap	(507)	—	—
Capital development cost-USA	(338)	—	—
Net deferred income tax assets (liabilities)	(13,895)	(22,709)	3,880

Deferred tax assets and liabilities have been offset where they relate to income taxes levied by the same taxation authority and the Company has the legal right and intent to offset. The following table shows the movement in net deferred tax assets (liabilities):

	June 30,	June 30,
	2022	2021
	$	$
Balance at the beginning of the year	(22,709)	3,880
Recognized in profit/loss	(2,410)	(2,167)
Recognized in goodwill	11,091	(25,462)
Recognized in equity	—	1,160
Recognized in deferred development costs	628	(124)
Recognized in OCI	(507)	—
Other foreign exchange movement	12	4
Balance at the end of the year	(13,895)	(22,709)

11.Income tax (continued)

Unrecognized deferred tax assets

Deferred taxes are provided as a result of temporary differences that arise due to the differences between the income tax values and the carrying amount of assets and liabilities. Deferred tax assets have not been recognized in respect of the following deductible temporary differences:

	June 30,	June 30,	July 1,
	2022	2021	2020
	$	$	$
Capital losses carried forward and other - Canadian	41	41	—
Capital losses carried forward - USA	12,885	12,885	—

The net capital loss carry forward may be carried forward indefinitely but can only be used to reduce capital gains. Deferred tax assets have not been recognized in respect of these items because it is not probable that future taxable profit will be available against which the group can utilize the benefits therefrom.

The Company has deducted available SR&ED for federal and provincial purposes and unutilized SR&ED tax credits. These consolidated financial statements take into account an income tax benefit resulting from tax credits available to the Company to reduce its net income for federal and provincial income tax purposes in future years as follows:

	Federal tax credits	Ontario tax credits
Year of expiration	carry forward	carry forward
	$	$
2034	212	—
2035	233	—
2036	270	—
2037	242	—
2038	184	—
2039	263	—
2040	244	35
2041	426	168
2042	355	61
	2,429	264

The income tax benefit of eligible SR&ED costs incurred in prior years but not utilized have been taken into account in these consolidated financial statements.