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Note 15 - Income Tax
 12 Months Ended
Dec. 31, 2023
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

15.

Income tax

 

Income tax differs from the amounts that would be obtained by applying the statutory rate to the respective year’s earnings before tax. Differences result from the following items:

 

  

2023

  

2022

 
         

Income tax expense using combined statutory rate of 26.5% (2022 - 26.5%)

 $53,884  $51,405 

Permanent differences

  2,075   584 

Adjustments to tax liabilities for prior periods

  111   230 

Non-deductible stock-based compensation

  5,667   4,782 

Foreign, state and provincial tax rate differential

  (5,420)  (8,043)

Other taxes

  -   16 

Provision for income taxes as reported

 $56,317  $48,974 

 

Earnings before income tax by jurisdiction comprise the following:

 

  

2023

  

2022

 
         

Canada

 $34,600  $32,125 

United States

  168,738   161,856 

Total

 $203,338  $193,981 

 

Income tax expense (recovery) comprises the following:

 

 

  

2023

  

2022

 
         

Current

        

Canada

 $9,494  $8,401 

United States

  64,267   32,585 
   73,761   40,986 
         

Deferred

        

Canada

  375   431 

United States

  (17,819)  7,557 
   (17,444)  7,988 
         

Total

 $56,317  $48,974 

 

The significant components of deferred income tax are as follows:

 

 

  

2023

  

2022

 
         

Deferred income tax assets

        

Loss carry-forwards

 $4,943  $2,251 

Expenses not currently deductible

  37,225   31,353 

Allowance for credit losses

  8,125   4,779 

Inventory and other reserves

  1,836   3,357 
   52,129   41,740 
         

Deferred income tax liabilities

        

Depreciation and amortization

  97,896   86,175 

Basis differences of partnerships and other entities

  1,919   2,053 

Prepaid and other expenses deducted for tax purposes

  2,186   1,896 
   102,001   90,124 
         

Net deferred income tax asset (liability) before valuation allowance

  (49,872)  (48,384)

Valuation allowance

  1,400   1,017 
         

Net deferred income tax asset (liability)

 $(51,272) $(49,401)

 

The recoverability of deferred income tax assets is dependent on generating sufficient taxable income before the 20 year loss carry-forward limitation. Although realization is not assured, the Company believes it is more likely than not that the deferred tax asset will be realized. The amount of the deferred tax asset considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carry-forward period are reduced.

 

The Company has gross operating loss carry-forwards as follows:

 

  

Loss carry forward

  

Gross losses not recognized

  

Net

 
  

2023

  

2022

  

2023

  

2022

  

2023

  

2022

 
                         

Canada

 $2,048  $2,336  $-  $-  $2,048  $2,336 

United States

  53,295   24,102   20,360   18,324   32,935   5,778 

 

These amounts above are available to reduce future federal, state, and provincial income taxes in their respective jurisdictions. Net operating loss carry-forward balances attributable to the United States and Canada expire over the next 9 to 20 years.

 

Cumulative unremitted earnings of US and foreign subsidiaries approximated $950,864 as at December 31, 2023 (2022 - $842,671). Income tax is not provided on the unremitted earnings of US and foreign subsidiaries because it has been the practice and is the intention of the Company to reinvest these earnings indefinitely in these subsidiaries.

 

The gross unrecognized tax benefits are $148 (2022 - $148). Of this balance, $148 (2022 - $148) would affect the Company’s effective tax rate if recognized. For the year ended December 31, 2023, there was no adjustment to interest and penalties related to provisions for income tax (2022 - nil). As at December 31, 2023, the Company had accrued $38 (2022 - $38) for potential income tax related interest and penalties.

 

The Company’s significant tax jurisdictions include the United States and Canada. The number of years with open tax audits varies depending on the tax jurisdictions. Generally, income tax returns filed with the Canada Revenue Agency and related provinces are open for three to four years and income tax returns filed with the U.S. Internal Revenue Service and related states are open for three to five years.

 

The Company does not currently expect any other material impact on earnings to result from the resolution of matters related to open taxation years, other than noted above. Actual settlements may differ from the amounts accrued. The Company has, as part of its analysis, made its current estimates based on facts and circumstances known to date and cannot predict changes in facts and circumstances that may affect its current estimates.