Income Taxes

12 Months Ended

Dec. 31, 2021

INCOME TAXES

Income tax expense during the years ended December 31, 2021 and 2020 differs from the amounts that would result from applying the combined Canadian federal and provincial income tax rate of 27% (2020 – 27%) to income before income taxes. These differences result from the following items:


	2021			2020
Income before income taxes	$	535,035		$	43,099
Combined Canadian federal and provincial income tax rate	27		%	27		%
Expected income tax expense	144,459			11,637
Non-taxable income and non-deductible expenses	(52,405)			24,003
Impact of tax rate differences between jurisdictions	(31,941)			—
Tax effect of temporary differences for which no tax benefit has been recognized	(39,843)			6,424
Change in fair value of derivative liabilities	(11,312)			8,063
Impact of US percentage depletion	(10,114)			(10,325)
Impact of Mexican inflation	(3,024)			(2,311)
Foreign exchange and other	(15,674)			(16,680)
Total income tax (recovery) expense	$	(19,854)		$	20,811

Comprising:
Current tax expense	$	25,163		$	35,050
Deferred tax recovery	(45,017)			(14,239)
	$	(19,854)		$	20,811

26. INCOME TAXES (CONTINUED)

The significant components of the Company's recognized deferred tax assets and deferred tax liabilities at December 31, 2021 and 2020 were as follows:


	2021		2020
Non-capital losses	$	62,419	$	22,421
Deductible temporary differences relating to:
Mineral properties, plant and equipment	75,259		45,109
Inventory	31,847		2,084
Reclamation and closure cost provision	16,023		15,080
Mining tax	10,717		3,924
Accrued liabilities	10,650		6,051
Investments and loans and borrowings	11,701		—
Suspended interest deduction	4,604		—
Other	7,396		8,248
Total deferred tax assets	$	230,616	$	102,917
Taxable temporary differences relating to:
Mineral properties, plant and equipment	$	(492,463)	$	(296,861)
Marketable securities	(30,227)		—
Reclamation and closure cost provision	(12,070)		(5,631)
Derivatives	(7,174)		—
Intercompany loan	(6,898)		(16,757)
Other	(1,490)		(13,528)
Total deferred tax liabilities	(550,322)		(332,777)
Net deferred tax liability	$	(319,706)	$	(229,860)

Presented as:
Deferred tax assets	$	10,576	$	—
Deferred tax liabilities	(312,198)		(229,860)
Deferred tax liabilities relating to assets held for sale (note 9)	(18,084)		—
	$	(319,706)	$	(229,860)

The movements in the Company's net deferred tax liability during the years ended December 31, 2021 and 2020 were as follows:


	2021		2020
Balance – beginning of year	$	(229,860)	$	(10,712)
Recognized in net income	45,017		14,239
Acquisition of Premier (note 5(a))	(121,931)		—
Acquisition of Leagold (note 5(e))	—		(230,458)
Recognized in OCI	(12,932)		—
Recognized in equity component of Convertible Notes	—		(2,929)
Balance – end of year	$	(319,706)	$	(229,860)

In assessing whether to recognize deferred tax assets, other than deferred tax assets arising from the initial recognition of assets and liabilities that do not affect accounting or taxable income which are not recognized, management considers whether it is probable that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income against which the deferred tax assets can be utilized.

26. INCOME TAXES (CONTINUED)

The Company's deductible temporary differences, unused tax losses and unused tax credits at December 31, 2021 and 2020 for which deferred tax assets have not been recognized were as follows:


	2021		2020
Deductible temporary differences relating to:
Mineral properties, plant and equipment	$	430,274	$	277,097
Investments and loans and borrowings	322,272		12,021
Inventories	—		18,978
Derivatives	8,276		97,647
Reclamation obligation	41,164		54,996
Share issue and finance costs	1,176		21,471
Interest expense	—		19,350
Other	14,970		903
Non-capital losses	449,984		357,080
Capital losses	10,689		26,826
State alternative minimum tax credit	7,434		7,787
	$	1,286,239	$	894,156

At December 31, 2021, the Company had the following estimated tax operating losses available to reduce future taxable income, including both losses for which deferred tax assets are recognized and losses for which deferred tax assets are not recognized as listed in the table above. The loss carryforwards expire as follows:


	2021
Canada (expire between 2035-2041)	$	238,898
United States - California (expire between 2034-2040 or after)	170,214
Mexico (expire between 2024-2030)	142,441
Brazil (no expiry)	117,671
Other (2026 and onwards)	10,938
	$	680,162