15 INCOME TAXES
Income tax expense differs from the amount that would be computed by applying the federal and state statutory income tax rates to loss before income taxes.
The reconciliation of the combined Canadian federal and provincial statutory income tax rate of 26% (2016 - 26%) to the effective tax rate is as follows:
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| Year Ended December 31, 2017 | Year Ended December 31, 2016 | Year ended December 31, 2015 |
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| Net loss before income taxes |
| $ (4,400,387) | $ (8,510,866) | $ (3,118,001) |
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| Expected income tax recovery at statutory rates |
| (1,144,101) | (2,212,825) | (826,275) |
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| Effect on income taxes of: |
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| Difference in foreign tax rates |
| 118,040 | (160,578) | (151,180) |
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| Tax rate changes and adjustments |
| 1,414,049 | (32,871) | 108,820 |
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| Prior year true-ups |
| (322,023) | - | - |
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| Share based compensation and non- deductible expenses |
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212,376 | 461,925 | (221,530) |
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| Foreign exchange rate translation adjustments |
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(175,106) | - | - |
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| Utilization of losses not previously recognized |
| (123,309) | (13,261) | - |
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| Change in tax benefits not recognized |
| 63,558 | 2,019,466 | 1,090,165 |
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| Income tax expense |
| $ 43,484 | $ 61,856 | $ - |
The following table summarizes the components of deferred tax:
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| December 31, 2017 | December 31, 2016 | December 31, 2015 |
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| Deferred tax assets: |
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| Non-Capital Losses Carried Forward | $ 547,512 | $ 1,380,983 | $ 115,780 |
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| Deferred tax liabilities: |
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| Equipment | (3,466) | (4,915) | - |
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| Intangible Asset | (544,046) | (1,368,271) | (100,185) |
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| Note Payable | - | (7,797) | (15,595) |
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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:
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| December 31, 2017 | December 31, 2016 | December 31, 2015 |
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| Deferred tax assets: |
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| Other temporary differences | 16,390 | 74,838 | 78,660 | |
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| Equipment | 1,408.601 | 1,318,118 | 98,010 | |
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| Intangible assets | - | 1,682 | 948,570 | |
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| Share issuance and financing costs | 458,062 | 630,643 | 791,570 | |
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| Non-capital loss carry forwards | 27,863,262 | 22,166,482 | 18,237,240 | |
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The Canadian non-capital loss carry forwards expire as noted in the table below. The U.S. net operating losses of $11,266,595 expire 2027 – 2037. Due to the acquisition in the prior year of a US company Section 382 of the Internal Revenue Code imposes annual limits on the Company’s ability to utilize its U.S. federal and state net operating loss carryforwards ("NOLs"). The Company’s NOLs will continue to be available to offset taxable income (until such NOLs are either utilized or expire) subject to the Section 382 annual limitation. The net operating losses for Ireland and UK of $1,786,307 and $344,120 may be carried forward indefinitely.
Share issue and financing costs will be fully amortized in 2021. The remaining deductible temporary differences may be carried forward indefinitely. 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's total Canadian non-capital income tax losses expire as follows:
| Year | Canada |
| 2023 | 386,011 |
| 2024 | 120,522 |
| 2025 | 1,247,040 |
| 2026 | 765,696 |
| 2027 | 2,924,214 |
| 2028 | 259,259 |
| 2029 | 165,792 |
| 2030 | 182,480 |
| 2031 | 278,033 |
| 2032 | 637,864 |
| 2033 | 383,720 |
| 2034 | 1,085,045 |
| 2035 | 1,464,744 |
| 2036 | 2,667,838 |
| 2037 | 2,336,477 |
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| 14,904,735 |