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Income tax expense and deferred taxes | 12 Months Ended
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Dec. 31, 2017
Text block1 [abstract] |
Income tax expense and deferred taxes |
17. | Income tax expense and deferred taxes
Total income tax expense (recovery) consists of:
|  | December 31, 2017 |  |  | December 31, 2016 |
|  | $ |  |  | $ |
Current tax expense |  |  | 39,232 |  |  |  | 47,166 |
Deferred tax expense (recovery) |  |  | (19,849) |  |  |  | 9,039 |
|  |  | 19,383 |  |  |  | 56,205 |
Total income tax expense (recovery) attributable to geographical jurisdiction is as follows:
|  | 2017 |  |  | 2016 |
|  | $ |  |  | $ |
Turkey |  |  | 30,139 |  |  |  | 64,343 |
Greece |  |  | (4,598) |  |  |  | (1,355) |
Brazil |  |  | (1,087) |  |  |  | (4,385) |
Canada |  |  | 2,960 |  |  |  | (1,428) |
Romania |  |  | (8,026) |  |  |  | (1,053) |
Other jurisdictions |  |  | (5) |  |  |  | 83 |
|  |  | 19,383 |  |  |  | 56,205 |
Factors affecting income tax expense (recovery) for the year:
|  | 2017 |  |  | 2016 |
|  | $ |  |  | $ |
Profit from continuing operations before income tax |  |  | 792 |  |  |  | 48,698 |
Canadian statutory tax rate |  |  | 26% |  |  |  | 26% |
Tax expense on net income at Canadian statutory tax rate |  |  | 206 |  |  |  | 12,662 |
Items that cause an increase (decrease) in income tax expense: |  |  |  |  |  |  |  |
Foreign income subject to different income tax rates than Canada |  |  | (11,792) |  |  |  | (15,695) |
Non-tax effected operating losses |  |  | 9,691 |  |  |  | 19,198 |
Non-deductible expenses and other items |  |  | 10,002 |  |  |  | 10,525 |
Foreign exchange and other translation adjustments |  |  | 6,289 |  |  |  | 16,048 |
Amounts under (over) provided in prior years |  |  | (84) |  |  |  | 453 |
Investment tax credits |  |  | (226) |  |  |  | (269) |
Withholding tax on foreign income |  |  | 5,297 |  |  |  | 13,283 |
Income tax expense |  |  | 19,383 |  |  |  | 56,205 |
The change for the year in the Company’s net deferred tax position was as follows:
|  | 2017 |  |  | 2016 |
Net deferred tax asset (liability) |  | $ |  |  | $ |
Balance at January 1, |  |  | (443,501) |  |  |  | (607,871) |
Deferred income tax (expense) recovery related to discontinued operations |  |  | - |  |  |  | 174,837 |
Deferred income tax liability related to Integra acquisition |  |  | (126,903) |  |  |  | - |
Deferred income tax (expense) recovery in the income statement |  |  | 19,849 |  |  |  | (9,039) |
Deferred tax recovery (expense) in other comprehensive income |  |  | 1,428 |  |  |  | (1,428) |
Net balance at December 31, |  |  | (549,127) |  |  |  | (443,501) |
The composition of the Company’s net deferred income tax asset and liability and deferred tax expense is as follows:
|  |  |  |  |  |  |  |  |  |  |  |  |  | Expense (recovery) |
Type of temporary difference |  | Deferred tax assets |  |  | Deferred tax liabilities |  |  | on the income statement |
|  | 2017 |  |  | 2016 |  |  | 2017 |  |  | 2016 |  |  | 2017 |  |  | 2016 |
|  | $ |  |  | $ |  |  | $ |  |  | $ |  |  | $ |  |  | $ |
Property, plant and equipment |  |  | - |  |  |  | - |  |  |  | 592,062 |  |  |  | 482,530 |  |  |  | (33,466 | ) |  |  | 11,200 |
Loss carryforwards |  |  | 31,457 |  |  |  | 15,436 |  |  |  | - |  |  |  | - |  |  |  | (4,641 | ) |  |  | (1,603 | )
Liabilities |  |  | 24,690 |  |  |  | 20,864 |  |  |  | - |  |  |  | - |  |  |  | (80 | ) |  |  | (3,496 | )
Investment tax credits |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 5,665 |
Other items |  |  | 1,997 |  |  |  | 13,995 |  |  |  | 15,208 |  |  |  | 11,266 |  |  |  | 18,338 |  |  |  | (2,727 | )
Balance at December 31, |  |  | 58,144 |  |  |  | 50,295 |  |  |  | 607,270 |  |  |  | 493,796 |  |  |  | (19,849 | ) |  |  | 9,039 |
Unrecognized deferred tax assets |  | 2017 |  |  | 2016 |  |  |
|  | $ |  |  | $ |  |  |
Tax losses |  |  | 167,030 |  |  |  | 164,100 |  |  |
Other deductible temporary differences |  |  | 11,253 |  |  |  | 9,968 |  |  |
Total unrecognized deferred tax assets |  |  | 178,283 |  |  |  | 174,068 |  |  |
Unrecognized tax losses At December 31, 2017 the Company had losses with a tax benefit of $167,030 (2016 – $164,100) which are not recognized as deferred tax assets. The Company recognizes the benefit of tax losses only to the extent of anticipated future taxable income that can be reduced by the tax losses. The gross amount of the tax losses for which a tax benefit has not been recorded expire as follows:
Expiry date |  | Canada |  |  | Brazil |  |  | Greece |  |  | Total |  |  |
|  |  |  | $ |  |  | $ |  |  | $ |  |  | $ |  |  |
2018 |  |  |  |  | - |  |  |  | - |  |  |  | 10,880 |  |  |  | 10,880 |  |  |
2019 |  |  |  |  | - |  |  |  | - |  |  |  | 28,934 |  |  |  | 28,934 |  |  |
2020 |  |  |  |  | - |  |  |  | - |  |  |  | 26,420 |  |  |  | 26,420 |  |  |
2021 |  |  |  |  | - |  |  |  | - |  |  |  | 16,058 |  |  |  | 16,058 |  |  |
2022 |  |  |  |  | - |  |  |  | - |  |  |  | 10,638 |  |  |  | 10,638 |  |  |
2025 |  |  |  |  | 7,858 |  |  |  | - |  |  |  | - |  |  |  | 7,858 |  |  |
2026 |  |  |  |  | 14,839 |  |  |  | - |  |  |  | - |  |  |  | 14,839 |  |  |
2027 |  |  |  |  | 10,703 |  |  |  | - |  |  |  | - |  |  |  | 10,703 |  |  |
2028 |  |  |  |  | 25,959 |  |  |  | - |  |  |  | - |  |  |  | 25,959 |  |  |
2029 |  |  |  |  | 23,444 |  |  |  | - |  |  |  | - |  |  |  | 23,444 |  |  |
2030 |  |  |  |  | 7,285 |  |  |  | - |  |  |  | - |  |  |  | 7,285 |  |  |
2031 |  |  |  |  | 45,351 |  |  |  | - |  |  |  | - |  |  |  | 45,351 |  |  |
2032 |  |  |  |  | 74,871 |  |  |  | - |  |  |  | - |  |  |  | 74,871 |  |  |
2033 |  |  |  |  | 64,883 |  |  |  | - |  |  |  | - |  |  |  | 64,883 |  |  |
2034 |  |  |  |  | 58,689 |  |  |  | - |  |  |  | - |  |  |  | 58,689 |  |  |
2035 |  |  |  |  | 55,266 |  |  |  | - |  |  |  | - |  |  |  | 55,266 |  |  |
2036 |  |  |  |  | 50,503 |  |  |  | - |  |  |  | - |  |  |  | 50,503 |  |  |
2037 |  |  |  |  | 43,180 |  |  |  | - |  |  |  | - |  |  |  | 43,180 |  |  |
No Expiry |  |  | - |  |  |  | 33,378 |  |  |  | - |  |  |  | 33,378 |  |  |
|  |  | 482,831 |  |  |  | 33,378 |  |  |  | 92,930 |  |  |  | 609,139 |  |  |
Capital losses with no expiry |  |  | 65,812 |  |  |  | - |  |  |  | - |  |  |  | 65,812 |  |  |
Tax effect of total losses not recognized |  |  | 134,289 |  |  |  | 5,791 |  |  |  | 26,950 |  |  |  | 167,030 |  |  |
Deductible temporary differences At December 31, 2017 the Company had deductible temporary differences for which deferred tax assets of $11,253 (2016 – $9,968) have not been recognized because it is not probable that future taxable profits will be available against which the Company can utilize the benefits. The vast majority of these temporary benefits have no expiry date. Temporary differences associated with investments in subsidiaries The Company has not recognized deferred tax liabilities in respect of historical unremitted earnings of foreign subsidiaries for which we are able to control the timing of the remittance and are considered reinvested for the foreseeable future. At December 31, 2017, these earnings amount to $788,137 (2016 – $782,803). Substantially all of these earnings would be subject to withholding taxes if they were remitted by the foreign subsidiaries. Other factors affecting taxation During the year the Turkish Lira has weakened, causing a deferred income tax expense during the year of $6,530 due to the decrease in the value of the future tax deductions associated with the Turkish operations. The Company expects that in the future significant foreign exchange movements in the Turkish Lira, Euro or Brazilian Real in relation to the U.S. dollar will cause significant volatility in the deferred income tax expense or recovery.

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