(a)

Income tax expense

Income tax expense included in the consolidated statements of operations and comprehensive income (loss) is as follows:

	2020			2019			2018

Current income tax expense	$	161		$	327		$	1,052
Deferred income tax recovery		(1,569	)		(960	)		(645	)
Total income tax expense (recovery)	$	(1,408	)	$	(633	)	$	407

The reconciliation of income taxes calculated at the Canadian statutory tax rate to the income tax expense recognized in the year is as follows:

	2020			2019			2018

Net income (loss) before income taxes	$	(8,890	)	$	(2,968	)	$	2,064
Net loss from discontinued operations before income taxes		(169	)		(29,126	)		(31	)
Net income (loss) before income taxes	$	(9,059	)	$	(32,094	)	$	2,033
Combined statutory tax rate		27.00	%		27.00	%		27.00	%

Income tax expense (recovery) at the Canadian statutory rate		(2,446	)		(8,665	)		549

Reconciling items:
Effect of difference in foreign tax rates		(86	)		(120	)		48
Non-deductible/non-taxable items		1,467			6,449			(121	)
Change in unrecognized deductible temporary differences		332			1,263			(257	)
Impact of foreign exchange		(112	)		222			915
Special mining duties		(185	)		231			117
Revisions to estimates		(297	)		58			(368	)
Share issue costs		(73	)		(174	)		(231	)
Other items		(8	)		103			(245	)

Income tax expense (recovery) recognized in the year	$	(1,408	)	$	(633	)	$	407

The Company recognized a non-cash recovery of $164 for the year ended December 31, 2020 (2019 - expense of $235; 2018 - expense of $379) related to the deferred tax impact of the special mining duty. The Canadian income tax rate increased from 26% to 27% effective January 1, 2018, with a statutory impact prior to year-end. The impact of this change has been reflected in the consolidated financial statements.

	December 31,			December 31,
	2020			2019

Deferred income tax assets	$	4,249		$	2,755
Deferred income tax liabilities		(5,618	)		(5,693	)

	$	(1,369	)	$	(2,938	)

The approximate tax effects of each type of temporary difference that gives rise to potential deferred income tax assets and liabilities are as follows:

	December 31, 2020			December 31, 2019

Reclamation provision	$	304		$	571
Non-capital losses		3,383			1,171
Other deductible temporary differences		562			1,013
Inventory		(2	)		(243	)
Exploration and evaluation assets		(3,349	)		(3,340	)
Plant, equipment and mining properties		(2,267	)		(2,110	)

Net deferred income tax liabilities	$	(1,369	)	$	(2,938	)

The net deferred tax liability presented in these consolidated financial statements is due to the difference in the carrying amounts and tax bases of the Mexican plant, equipment and mining properties which were acquired in the purchase of Avino Mexico. The carrying values of the Mexican plant, equipment and mining properties includes an estimated fair value adjustment recorded upon the July 17, 2006, acquisition of control of Avino Mexico that was based on a share exchange, while the tax bases of these assets are historical undeducted tax amounts that were nil on acquisition. The deferred tax liability is attributable to assets in the tax jurisdiction of Mexico.

(b)

Unrecognized deductible temporary differences:

Temporary differences and tax losses arising in Canada have not been recognized as deferred income tax assets due to the fact that management has determined it is not probable that sufficient future taxable profits will be earned in Canada to recover such assets. Unrecognized deductible temporary differences are summarized as follows:

	December 31, 2020			December 31, 2019

Tax losses carried forward	$	18,974		$	24,229
Share issue costs		1,144			1,352
Plant, equipment and mining properties		263			170
Exploration and evaluation assets		1,248			1,237
Investments		(400	)		(1,273	)
Reclamation provision and other		-			-

Unrecognized deductible temporary differences	$	21,229		$	25,715

The Company has capital losses of $11,396 carried forward and $7,578 in non-capital tax losses carried forward available to reduce future Canadian taxable income. The capital losses can be carried forward indefinitely until used. The non-capital losses have an expiry date range of 2027 to 2040.