7. Taxation Payable

3 Months Ended

Mar. 31, 2016

Notes to Financial Statements

7. Taxation Payable

7. Taxation Payable

The Company has the following outstanding tax liabilities:

a) Harmonized Sales taxes

This represents sales tax liabilities in Canada, these taxes were never paid, management intends paying these taxation liabilities together with interest and penalties thereon, when sufficient funds are raised to do so. As of March 31, 2016 the balance due to the Canadian tax authorities amounted to $327,690.

b) Payroll taxes

The Company is delinquent in filing its payroll tax returns resulting in taxes, interest and penalties payable at March 31, 2016 and December 31, 2015. As of March 31, 2016 and December 31, 2015 as part of Taxes Payable, the Company has payroll tax liabilities of approximately $2,169,775 and $1,780,052, respectively, due to various taxing authorities. If the Company does not satisfy these liabilities, the taxing authorities may place liens on its bank accounts which would have a negative impact on its ability to operate. Further, the actual liability may be higher due to interest or penalties assessed by the taxing authorities.

c) US taxation and penalties

The Company has assets and operates a business in Canada and is required to disclose these operations to the US taxation authorities, the requisite disclosure has not been made and management has reserved the maximum penalty due to the IRS in terms of non-disclosure. This non-compliance with US disclosure requirements is currently being addressed.

The taxes and penalties due as of March 31, 2016 and December 31, 2015 is as follows:

	March 31, 2016		December 31, 2015
	Unaudited
Payroll Taxes and harmonized sales taxes	$	2,497,464	$	2,290,506
US taxes and penalties		200,000		200,000
	$	2,697,464	$	2,490,506