Income Taxes

12 Months Ended

Dec. 31, 2020

15	INCOME TAXES

The components of the provision for (recovery of) income tax for the years ended December 31, 2020, 2019 and 2018 are as follows:

	2020
	Current		Deferred			Total
US Federal	$	—	$	(4,879	)	$	(4,879	)
US State		260		(434	)		(174	)
Canadian		3,412		(1,149	)		2,263
	$	3,672	$	(6,462	)	$	(2,790	)

	2019
	Current			Deferred			Total
US Federal	$	—		$	(5,922	)	$	(5,922	)
US State		8			(751	)		(743	)
Canadian		(19	)		818			799
	$	(11	)	$	(5,855	)	$	(5,866	)

	2018
	Current		Deferred			Total
US Federal	$	—	$	(1,786	)	$	(1,786	)
US State		8		(187	)		(179	)
Canadian		422		(757	)		(335	)
	$	430	$	(2,730	)	$	(2,300	)

The provision for (recovery of) income taxes reflected in the consolidated statements of (loss) income for the years ended December 31, 2020, 2019 and 2018 differs from the amounts computed at the federal statutory tax rates. The principal

differences between the statutory income tax (recovery) and the effective provision for (recovery of) income taxes are summarized as follows:

	Year Ended December 31,
	2020			2019			2018
Income (loss) before income taxes	$	8,818		$	(3,541	)	$	(9,815	)
Tax (recovery) calculated at US domestic tax rates		1,869			(744	)		(2,061	)
State tax adjustments		(310	)		(350	)		—
Non-deductible items		(6,531	)		1,304			394
True up of prior year income tax estimates		(181	)		207			(206	)
Capitalized debt amortization costs		—			(631	)		—
Share of (income) losses from joint venture		(228	)		(4,367	)		(75	)
Unrealized foreign exchange		—			(276	)		(309	)
Deferred adjustment		343			(1,920	)		—
Differences attributed to joint venture capital transactions		—			(487	)		—
Tax rate differences on deferred items		49			(42	)		(56	)
Differences in Canadian tax rates		1,643			1,472			92
Change in tax rates		37			—			—
Change in valuation allowance		3			(144	)		—
Other		516			112			(79	)
Provision for (recovery of) income taxes	$	(2,790	)	$	(5,866	)	$	(2,300	)

The statutory tax rate in effect in Canada and the United States for the years ended December 31, 2020, 2019 and 2018 was 27.0% and 21.0%, respectively.

The blended effective tax rate for 2020 was (31.4%) compared to 165.6% and 23.4% in 2019 and 2018, respectively.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

The deferred tax assets and liabilities presented on the consolidated statements of financial position are net amounts corresponding to their reporting jurisdiction. The deferred tax assets and liabilities presented in the note disclosure are grouped based on asset and liability classification without consideration of their corresponding reporting jurisdiction.

Significant components of the Company’s net deferred income taxes at December 31, 2020 and 2019 are as follows:

	2020			2019
Deferred tax assets:
Other assets	$	4,935		$	2,536
Long-term debt		897			1,040
Tax losses: Non-capital and farm losses		14,336			11,553
Provisions: Debt and unit issuance costs		1,355			800
Joint venture shares		—			1,154
Tax losses: Valuation allowance		(35	)		(31	)
		21,488			17,052
Deferred tax liabilities:
Joint venture shares		(2,651	)		(2,593	)
Cash adjustment		(7,604	)		—
Property, plant and equipment		(15,980	)		(8,333	)
		(26,235	)		(10,926	)
Net tax assets	$	(4,747	)	$	6,126

In assessing the ability to realize deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the

generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon available positive and negative evidence and future taxable income, the Company has recorded a $35 valuation allowance on their deferred tax assets for the year ended December 31, 2020. The valuation allowance reflected on the consolidated balance sheets is approximately $35, $31 and $504 at December 31, 2020, 2019 and 2018 respectively.

Included in the schedule of deferred tax assets and liabilities above are US federal net operating losses carryforwards of approximately $58,780 and $48,285 as of December 31, 2020 and 2019, respectively, which will begin to expire in 2031. At the state level, the Company has a combined state net operating loss carry forward of approximately $21,108 and $12,572 as of December 31, 2020 and 2019, respectively, which started to expire in 2020. The Canadian Non-Capital Losses carry forwards are $3,345 and $1,770 as of December 31, 2020 and 2019, respectively, which will begin to expire in 2027.

At December 31, 2020 and 2019, the balance of uncertain tax benefits is zero. The Company does not anticipate that the amount of the uncertain tax benefit will significantly increase within the next 12 months. The Company recognizes accrued interest related to uncertain tax benefits and penalties as income tax expense. As of December 31, 2020 and 2019, there are no recognized liabilities for interest or penalties.

The Company is subject to taxation in the U.S. and various states, as well as Canada and its provinces. As of December 31, 2020, the Company’s tax years for 2017, 2018 and 2019 are subject to examination by the tax authorities. As of December 31, 2020, the Company is no longer subject to U.S. federal, state or local examinations by tax authorities for years before 2016.

- 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.

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