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Note 16 - Income Tax | 12 Months Ended
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Dec. 31, 2016
Notes to Financial Statements |
Income Tax Disclosure [Text Block] |
16. |  | Income tax
The following is a reconciliation stated as a percentage of pre-tax earnings of the Ontario, Canada combined statutory corporate income tax rate to the Company’s effective tax rate:
|  | 2016 |  | 2015 |  | 2014
Combined statutory rate |  |  | 26.5 | % |  |  | 26.5 | % |  |  | 26.5 | %
Nondeductible expenses |  |  | 2.4 |  |  |  | 5.8 |  |  |  | 6.4 |
Tax effect of flow-through entities |  |  | (1.1 | ) |  |  | (2.5 | ) |  |  | (2.9 | )
Impact of changes in foreign exchange rates |  |  | - |  |  |  | (2.1 | ) |  |  | (0.8 | )
Adjustments to tax liabilities for prior periods |  |  | (0.4 | ) |  |  | (1.4 | ) |  |  | (2.5 | )
Effects of changes in enacted tax rates |  |  | - |  |  |  | (0.5 | ) |  |  | 0.1 |
Changes in liability for unrecognized tax benefits |  |  | (0.6 | ) |  |  | (0.6 | ) |  |  | (1.9 | )
Stock-based compensation |  |  | 0.5 |  |  |  | 13.9 |  |  |  | 4.1 |
Foreign, state, and provincial tax rate differential |  |  | 4.4 |  |  |  | 1.1 |  |  |  | (6.2 | )
Other taxes |  |  | 1.4 |  |  |  | 2.4 |  |  |  | 2.4 |
Change in valuation allowance |  |  | 0.3 |  |  |  | 0.6 |  |  |  | (1.7 | )
Outside basis difference in investments |  |  | 0.5 |  |  |  | 1.4 |  |  |  | 1.4 |
Other |  |  | 0.4 |  |  |  | 0.3 |  |  |  | 0.3 |
Effective income tax rate |  |  | 34.3 | % |  |  | 44.9 | % |  |  | 25.2 | %
Earnings before income tax by jurisdiction comprise the following:
|  | 2016 |  | 2015 |  | 2014
Canada |  | $ | 23,309 |  |  | $ | (31,818 | ) |  | $ | (11,751 | )
United States |  |  | 40,435 |  |  |  | 27,301 |  |  |  | 14,242 |
Foreign |  |  | 75,656 |  |  |  | 76,984 |  |  |  | 69,623 |
Total |  | $ | 139,400 |  |  | $ | 72,467 |  |  | $ | 72,114 |
The Canadian earnings before income tax for the year ended December 31, 2015 includes stock-based compensation and transaction costs of $49,465 related to the Spin-off. Income tax expense (recovery) comprises the following:
|  | 2016 |  | 2015 |  | 2014
Current |  |  |  |  |  |  |  |  |  |  |  |
Canada |  | $ | 5,091 |  |  | $ | (770 | ) |  | $ | (6,343 | )
United States |  |  | 2,090 |  |  |  | 1,555 |  |  |  | (3,474 | )
Foreign |  |  | 30,650 |  |  |  | 29,014 |  |  |  | 28,901 |
|  |  | 37,831 |  |  |  | 29,799 |  |  |  | 19,084 |
Deferred |  |  |  |  |  |  |  |  |  |  |  |
Canada |  |  | 2,278 |  |  |  | (875 | ) |  |  | (336 | )
United States |  |  | 12,753 |  |  |  | 5,980 |  |  |  | 2,728 |
Foreign |  |  | (5,033 | ) |  |  | (2,352 | ) |  |  | (3,271 | )
|  |  | 9,998 |  |  |  | 2,753 |  |  |  | (879 | )
Total |  | $ | 47,829 |  |  | $ | 32,552 |  |  | $ | 18,205 |
The significant components of deferred income tax are as follows:
|  | 2016 |  | 2015
Loss carry-forwards and other credits |  | $ | 56,822 |  |  | $ | 70,952 |
Expenses not currently deductible |  |  | 22,525 |  |  |  | 22,018 |
Stock-based compensation |  |  | 474 |  |  |  | 210 |
Investments |  |  | 17,303 |  |  |  | 15,470 |
Provision for doubtful accounts |  |  | 4,990 |  |  |  | 3,601 |
Financing fees |  |  | 376 |  |  |  | 267 |
Net unrealized foreign exchange |  |  | (399 | ) |  |  | 3,097 |
Depreciation and amortization |  |  | (21,713 | ) |  |  | (18,932 | )
Less: valuation allowance |  |  | (12,707 | ) |  |  | (15,603 | )
Net deferred income tax asset |  | $ | 67,671 |  |  | $ | 81,080 |
As at December 31, 2016, the Company believes that it is more likely than not that the net deferred tax assets of $67,671 will be realized based upon future earnings, consideration of net operating loss (“NOL”) limitations, earnings trends and tax planning strategies. The amount of deferred tax assets considered realizable, however, could be reduced in the near term if estimates of future earnings are reduced. The Company has gross NOL carry-forward balances as follows:
|  | Gross loss carry forward |  | Gross losses not recognized |  | Net
|  | 2016 |  | 2015 |  | 2016 |  | 2015 |  | 2016 |  | 2015
Canada |  | $ | 37,428 |  |  | $ | 49,924 |  |  | $ | 153 |  |  | $ | 141 |  |  | $ | 37,275 |  |  | $ | 49,783 |
United States |  |  | 85,550 |  |  |  | 118,224 |  |  |  | 4,100 |  |  |  | 4,100 |  |  |  | 81,450 |  |  |  | 114,124 |
Foreign |  |  | 45,988 |  |  |  | 41,333 |  |  |  | 31,543 |  |  |  | 31,902 |  |  |  | 14,445 |  |  |  | 9,431 |
The Company has gross capital loss carry-forwards as follows:
|  | Gross loss carry forward |  | Gross losses not recognized |  | Net
|  | 2016 |  | 2015 |  | 2016 |  | 2015 |  | 2016 |  | 2015
Canada |  | $ | 183 |  |  | $ | 369 |  |  | $ | 108 |  |  | $ | 369 |  |  | $ | 75 |  |  | $ | - |
United States |  |  | 54 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 54 |  |  |  | - |
Foreign |  |  | 6,521 |  |  |  | 6,489 |  |  |  | 6,521 |  |  |  | 6,489 |  |  |  | - |  |  |  | - |
These amounts above are available to reduce future federal, state, and provincial income taxes in their respective jurisdictions. NOL carry-forward balances attributable to Canada begin to expire in 2030. NOL carry-forward balances attributable to the United States begin to expire in 2030. Foreign NOL carry-forward balances begin to expire in 2018. The utilization of NOLs may be subject to certain limitations under federal, provincial, state or foreign tax laws. Cumulative unremitted foreign earnings of the US subsidiaries is nil (2015 - nil). Cumulative unremitted foreign earnings of international subsidiaries of the Company approximated $21,886 as at December 31, 2016 (2015 - $21,642). The Company has not provided a deferred tax liability on the unremitted foreign earnings as it is management’s intent to permanently reinvest such earnings outside of Canada. In addition, any repatriation of such earnings would not be subject to significant Canadian or foreign taxes. A reconciliation of the beginning and ending amounts of the liability for unrecognized tax benefits is as follows:
|  | 2016 |  | 2015
Balance, January 1 |  | $ | 2,519 |  |  | $ | 3,624 |
Gross increases for tax positions of current period |  |  | 111 |  |  |  | 174 |
Gross increases for tax positions of prior periods |  |  | 41 |  |  |  | 365 |
Amount recognized on acquisitions |  |  | 613 |  |  |  | - |
Reduction for settlements with taxing authorities |  |  | - |  |  |  | (335 | )
Reduction for lapses in applicable statutes of limitations |  |  | (1,031 | ) |  |  | (967 | )
Foreign currency translation |  |  | 39 |  |  |  | (342 | )
Balance, December 31 |  | $ | 2,292 |  |  | $ | 2,519 |
Of the $2,292 (2015 - $2,519) in gross unrecognized tax benefits, $2,292 (2015 - $2,519) would affect the Company’s effective tax rate if recognized. For the year ended December 31, 2016, additional interest and penalties of $234 related to uncertain tax positions were accrued (2015 - $174; 2014 - 106). The Company reversed $58 of accrued interest and penalties related to settled positions in 2016 (2015 - $106; 2014 - nil). As at December 31, 2016, the Company had accrued $350 (2015 - $174) for potential income tax related interest and penalties. Within the next twelve months, the Company believes it is reasonably possible that $581 of unrecognized tax benefits associated with uncertain tax positions may be reduced due to lapses in statutes of limitations. The Company files tax returns in Canada, the United States and multiple foreign jurisdictions. The number of years with open tax audits varies depending on the tax jurisdiction. Generally, income tax returns filed with the Canada Revenue Agency and related provinces are open for four to seven years and income tax returns filed with the United States Internal Revenue Service and related states are open for three to five years. Tax returns in the significant foreign jurisdictions that the Company conducts business in are generally open for four 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.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32537-109319 + Details
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