Income Taxes

12 Months Ended

Dec. 31, 2021

Text Block [Abstract]

Income Taxes

NOTE 25 - INCOME TAXES

a) Amounts recognized in net loss

	Year Ended December 31,
	2021			2020			2019
Current tax expense
Current year		157,303			(295,709	)		181,895
Changes in estimates related to prior years		–			–			–
		157,303			(295,709)			181,895
Deferred tax expense (recovery)
Origination and reversal of temporary differences		(13,161,689	)		(10,744,803	)		(6,261,674	)
Change in unrecognized deferred income tax assets		11,339,580			10,076,594			3,569,361
		(1,822,109)			(668,209)			(2,692,313)
Tax expense (recovery)	$	(1,664,806)		$	(963,918)		$	(2,510,418)

b) Reconciliation of effective tax rate

The following table is a reconciliation of income tax expense (recovery), at the Canadian income tax rate and the amount of reported income tax recovery in the consolidated statements of loss and comprehensive loss. The Company’s operations are subject to income taxes primarily in Canada and the United States.

	Year Ended December 31,
	2021			2020			2019
Loss before taxes	$	(46,364,119)		$	(35,824,882)		$	(30,405,252)
Statutory income tax rate 1		27	%		27	%		27	%
Income tax recovery at statutory rate		(12,518,312)			(9,672,718)			(8,209,418)
Increase (decrease) in taxes resulting from:
Change in deferred tax assets not recognized		11,339,580			10,076,594			3,569,361
Foreign tax rate and other foreign tax differences		(2,089,761)			(2,293,503)			(1,015,536)
Change in enacted rates		608,064			(58,050)			–
Share issuance costs and other		(828,082)			126,247			49,210
Non-deductible transaction costs		38,776			424,828			2,664,789
Other non-deductible items		1,784,929			432,684			431,176
Tax expense (recovery)	$	(1,664,806)		$	(963,918)		$	(2,510,418)

1  Comprised of the Canadian Federal effective corporate tax rate of 15.0% and blended provincial tax rates.

c) Movement in deferred tax balances

The significant components of the Company’s deferred income tax asset (liabilities) are as follows:

	At December 31, 2020		Recovery/ (expense) through earnings		Recovery/ (expense) through equity		Recovery/ (expense) through OCI		At December 31, 2021
Property and equipment	$	261,661	$	(195,977)	$	–	$	2,575	$	68,259
Intangible assets		(5,012,355)		1,415,370		–		73,801		(3,523,184)
Loans and accrued liabilities		(1,714,850)		1,471,654		–		(1,816)		(245,012)
Share issuance costs		27,453		25,467		–		–		52,920
Foreign exchange		–		(6,765)		–		24		(6,741)
Non-capital losses/net operating losses		2,269,186		(887,640)		–		(18,845)		1,362,701
Total	$	(4,168,905)	$	1,822,109	$	–	$	55,739	$	(2,291,057)

	At December 31, 2019		Acquired in business combinations		Recovery/ (expense) through earnings		Recovery/ (expense) through equity		Recovery/ (expense) through OCI		At December 31, 2020
Property and equipment	$	–	$	(376)	$	263,436	$	–	$	(1,399)	$	261,661
Intangible assets		(5,321,008)		(1,136,429)		1,280,692		–		164,390		(5,012,355)
Loans and accrued liabilities		(1,696,435)		–		(41,233)		24,000		(1,182)		(1,714,850)
Share issuance costs		–		–		27,453		–		–		27,453
Foreign exchange		(39,533)		–		39,533		–		–		0
Non-capital losses/net operating losses		3,202,361		–		(901,672)		–		(31,503)		2,269,186
Total	$	(3,854,615)	$	(1,136,805)	$	668,209	$	24,000	$	130,306	$	(4,168,905)

d) Deferred tax assets not recognized and tax losses carried forward

The Company recognizes deferred tax assets to the extent that it is probable that future taxable profit will be available against which the Company can utilize the benefits of the deductible temporary differences and unused tax losses. Deductible temporary differences and unused tax losses for which a future benefit has not been recognized as a deferred tax asset include the following:

	Year Ended December 31,
	2021		2020
Net operating losses - United States	$	77,415,498	$	55,395,751
Non-capital losses - Canada		68,018,286		45,619,846
Foreign tax losses		157,602		865,599
Investment tax credits and research and development expenditures		6,603,163		6,603,287
Property and equipment		948,765		753,467
Share issuance costs		6,510,677		1,282,965
Other		2,046,890		1,922,194
	$	161,700,881	$	112,443,109

The Company has net operating losses of approximately US$60,837,326 and non-capital losses of approximately $70,204,681 (2020: US$44.1 million and $49.6 million) which are available to reduce future year’s taxable income in the United States and Canada, respectively. The net operating losses will start expiring in 2029 while the non-capital losses will start expiring in 2027 if not utilized.

The Company has foreign tax losses in various jurisdictions of approximately $2,307,882 (2020 - $1.2 million) which are available to reduce future year’s taxable income in their respective countries. The losses have expiry dates ranging from five years to indefinite life. The investment tax credit balance is $500,000 (2020 - $500,000) which is available to reduce future year’s taxes payable in Canada. The investment tax credits begin to expire in 2022 if not utilized.

Management estimates future income using forecasts based on the best available current information. No deferred tax liability has been recognized at December 31, 2021 or December 31, 2020 on temporary differences associated with earnings retained in the Company’s investments in foreign subsidiaries in which it has an equity percentage. The Company is able to control the timing of the reversal of these differences and currently has no plans in the foreseeable future to repatriate any funds in excess of its foreign investment.