• Filing Date: 2019-07-11
  • Form Type: 10-K
  • Description: Annual report
Income Taxes
12 Months Ended
Apr. 30, 2019
Income Taxes [Text Block]
Note 12

Income Taxes


Deferred tax assets and liabilities are recognized for temporary differences between the carrying amount of the balance sheet items and their corresponding tax values as well as for the benefit of losses available to be carried forward to future years for tax purposes that are likely to be realized.


Significant components of the Company’s deferred tax assets and liabilities, after applying enacted corporate income tax rates, are as follows:

      Years Ended  
      April 30,  
      2019     2018  
  Tax loss carry forwards $  14,805,000   $  13,606,000  
  Capital losses carried forward   240,000     242,000  
  Equipment   142,000     133,000  
  Other   7,000     12,000  
  Bad debt   227,000     109,000  
  Nondeductible research and development expenses   2,971,000     2,993,000  
  Investment tax credits   436,000     439,000  
  Other intangibles   428,000     431,000  
  Acquired technology   (383,000 )   (183,000 )
  Valuation allowance established by management   (18,874,000 )   (17,782,000 )
  Net deferred tax assets $  –   $  –  

The provision for income taxes differ from the amount calculated using the U.S. federal and state statutory income tax rates as follows:

      Years Ended  
      April 30,  
      2019     2018  
  Tax (recovery) based on U.S. rates $  (1,053,000 ) $  (957,000 )
  Foreign tax rate differential   32,000     (20,000 )
  Non-deductible stock option compensation   101,000     182,000  
  Effect of reduction (increase) in statutory rates   (203,000 )   6,648,000  
  Foreign exchange losses on revaluation of deferred tax balances   411,000     (464,000 )
  Under provision relating to prior year   (380,000 )   (72,000 )
  Expiry of non-operating losses       706,000  
  Increase in valuation allowance   1,092,000     (6,023,000 )
  Income tax expense for year $  –   $  –  

On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was enacted, which significantly revised the ongoing U.S. corporate income tax law by lowering the U.S. federal corporate income tax rate from 35% to 21%. The Tax Act also incorporated changes to certain international tax provisions, including the implementation of a territorial tax system that imposed a one-time tax on foreign unremitted earnings. The Company did not anticipate that the foreign provisions would have an impact to the Company’s taxes. However, guidance on how provisions of the U.S. Tax Act will be applied or otherwise administered are still being issued by the U.S. Treasury Department, the IRS, and other standard-setting bodies. Adjustments to amounts that we have previously recorded that may materially impact our provision for income taxes may be made as future guidance is issued.

As at April 30, 2019, the Company had net operating loss carry-forwards available to reduce taxable income in future years as follows:

  Country         Amount     Expiration Dates  
  United States – US$       $  51,886,000     2027 – 2039  
  United States – US$       $  5,757,000 (1)   Indefinite  
  Canada – CDN$       $  13,437,000 (2)   2023 – 2039  

(1) Net operating losses arising in tax year beginning after December 31, 2017 can be carried forward indefinitely instead of 20 years and carrybacks are no longer permitted. However, the net operating loss carryforward is limited and can only offset 80% of taxable income.

(2) These losses are subject to tax legislation that limits the use of the losses against future income of the Company’s Canadian subsidiaries.

The Company is subject to taxation in the U.S. and Canada. It is subject to tax examinations by tax authorities for all taxation years commencing in or after 2002. The Company does not expect any material increase or decrease in its income tax expense in the next twelve months related to examinations or changes in uncertain tax positions.

Changes in the Company’s uncertain tax positions for the year ended April 30, 2019 and April 30, 2018 were as follows:

      Years Ended  
      April 30,  
      2019     2018  
  Balance at beginning of year $  9,763   $  9,763  
  Increases related to prior year tax positions (interest and penalties)        
  Increases related to current year tax positions (interest and penalties)        
  Lapses in statute of limitations        
  Balance at end of year $  9,763   $  9,763