XML 32 R17.htm IDEA: XBRL DOCUMENT
v3.19.1

Income Tax | 12 Months Ended
--- | ---
Dec. 31, 2018
Income Tax Disclosure [Abstract] |
Income Tax | 11. INCOME TAX [a] On August 2, 2017, OncoGenex completed a reverse takeover with Achieve. OncoGenex changed its name to Achieve Life Sciences, Inc. We are a Delaware incorporated company subject to blended US Federal and state statutory rates for December 31, 2018, 2017 and 2016 of 21%, 34% and 34%, respectively. For the purposes of estimating the tax rate in effect at the time that deferred tax assets and liabilities are expected to reverse, management uses the furthest out available future tax rate in the applicable jurisdictions. Income tax expense consisted of the following (in thousands):
(In thousands) |  | 2018 |  |  | 2017 |  |  | 2016 |
Income taxes at statutory rates (at a rate of 21% for 2018 and 34% for 2017 and 2016) |  | $ | (2,664 | ) |  | $ | (4,636 | ) |  | $ | (504 | )
Expenses not deducted for tax purposes |  |  | 70 |  |  |  | (174 | ) |  |  | — |
Effect of tax rate changes on deferred tax assets and liabilities |  |  | (1,416 | ) |  |  | 3,158 |  |  |  | — |
Rate differential on foreign earnings |  |  | (165 | ) |  |  | 314 |  |  |  | — |
Reduction in benefit of operating losses |  |  | — |  |  |  | — |  |  |  | — |
Reduction in the benefit of other tax attributes |  |  | — |  |  |  | — |  |  |  | — |
Investment tax credits |  |  | — |  |  |  | — |  |  |  | — |
Change in valuation allowance |  |  | 4,182 |  |  |  | (1,683 | ) |  |  | — |
Book to tax return adjustments |  |  | 20 |  |  |  | — |  |  |  | — |
Other |  |  | (27 | ) |  |  | (14 | ) |  |  | — |
Income tax expense |  | $ | — |  |  | $ | (3,035 | ) |  | $ | (504 | )
[b] At December 31, 2018, we have investment tax credits of $2.6 million (2017—$2.6 million) available to reduce future Canadian income taxes otherwise payable. We also have non-capital loss carryforwards of $123.3 million (2017—$120.4 million) available to offset future taxable income in Canada, UK net operating loss carryforwards of $1.8 million (2017—$0.8 million) to offset future taxable income in the UK and federal net operating loss carryforwards of $17.6 million (2017—$9.9 million) to offset future taxable income in the United States. The investment tax credits and non-capital losses and net operating losses for income tax purposes expire as follows (in thousands):
|  |  |  |  |  | US |  |  | Canadian |  |  | UK |
|  | Investment |  |  | Net Operating |  |  | Non-capital |  |  | Net Operating |
|  | Tax Credits |  |  | Losses |  |  | Losses |  |  | Losses |
2022 |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
2023 |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
2024 |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
2025 |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
2026 |  |  | 244 |  |  |  | — |  |  |  | 7,364 |  |  |  | — |
2027 |  |  | 71 |  |  |  | — |  |  |  | 4,949 |  |  |  | — |
2028 |  |  | 148 |  |  |  | — |  |  |  | 8,020 |  |  |  | — |
2029 |  |  | 317 |  |  |  | 9 |  |  |  | (9 | ) |  |  | 33 |
2030 |  |  | 346 |  |  |  | 5 |  |  |  | 6,288 |  |  |  | 20 |
2031 |  |  | 486 |  |  |  | 17 |  |  |  | 12,121 |  |  |  | 34 |
2032 |  |  | 363 |  |  |  | 43 |  |  |  | 17,278 |  |  |  | 41 |
2033 |  |  | 193 |  |  |  | 2 |  |  |  | 23,240 |  |  |  | 53 |
2034 |  |  | 215 |  |  |  | 3 |  |  |  | 17,077 |  |  |  | 45 |
2035 |  |  | 122 |  |  |  | 654 |  |  |  | 3,112 |  |  |  | 27 |
2036 |  |  | 79 |  |  |  | 611 |  |  |  | 16,664 |  |  |  | 56 |
2037 |  |  | 19 |  |  |  | 8,763 |  |  |  | 4,254 |  |  |  | 633 |
2038 |  |  | 52 |  |  |  | 7,491 |  |  |  | 2,937 |  |  |  | 887 |
|  | $ | 2,655 |  |  | $ | 17,598 |  |  | $ | 123,295 |  |  | $ | 1,829 |
In addition, we have unclaimed tax deductions of approximately $14.5 million related to scientific research and experimental development expenditures available to carry forward indefinitely to reduce Canadian taxable income of future years. We also have research and development tax credits of $0.1 million available to reduce future taxes payable in the United States. The research and development tax credits expire in 2038. [c] Significant components of our deferred tax assets as of December 31 are shown below (in thousands):
|  | 2018 |  |  | 2017 |
Deferred tax assets |  |  |  |  |  |  |  |
Tax basis in excess of book value of assets |  | $ | 886 |  |  | $ | 850 |
Non-capital loss carryforwards |  |  | 37,332 |  |  |  | 33,524 |
Research and development deductions and credits |  |  | 5,707 |  |  |  | 5,506 |
Stock options |  |  | 171 |  |  |  | 51 |
§59(e) Capitalized R&D expenses |  |  | 3,334 |  |  |  | 3,252 |
Accrued expenses |  |  | — |  |  |  | — |
Other |  |  | 170 |  |  |  | 246 |
Total deferred tax assets |  |  | 47,600 |  |  |  | 43,429 |
Valuation allowance |  |  | (47,123 | ) |  |  | (42,914 | )
Net deferred assets |  |  | 477 |  |  |  | 515 |
Deferred tax liabilities |  |  |  |  |  |  |  |
Intangible assets |  |  | (474 | ) |  |  | (513 | )
Other |  |  | (3 | ) |  |  | (2 | )
Total deferred tax liabilities |  |  | (477 | ) |  |  | (515 | )
Net deferred tax assets |  |  | — |  |  |  | — |
The potential income tax benefits relating to these deferred tax assets have not been recognized in the accounts as their realization did not meet the requirements of “more likely than not” under the liability method of tax allocation. Accordingly, a valuation allowance has been recorded and no net deferred tax assets have been recognized in all jurisdictions as at December 31, 2018. [d] Under ASC 740, the benefit of an uncertain tax position that is more likely than not of being sustained upon audit by the relevant taxing authority must be recognized at the largest amount that is more likely than not to be sustained. No portion of the benefit of an uncertain tax position may be recognized if the position has less than a 50% likelihood of being sustained. A reconciliation of the unrecognized tax benefits of uncertain tax positions for the year ended December 31, 2018 is as follows (in thousands):
|  | Year ended |
|  | December 31, |
|  | 2018 |  |  | 2017 |  |  | 2016 |
Balance at January 1 |  | $ | 715 |  |  | $ | 715 |  |  | $ | 699 |
Additions based on tax positions related to the current year |  |  | 6 |  |  |  | — |  |  |  | 16 |
Deductions based on tax positions related to prior years |  |  | (4 | ) |  |  | — |  |  |  | — |
Balance at December 31 |  | $ | 717 |  |  | $ | 715 |  |  | $ | 715 |
As of December 31, 2018, unrecognized benefits of approximately $0.7 million, if recognized, would affect our effective tax rate, and would reduce our deferred tax assets. Our accounting policy is to treat interest and penalties relating to unrecognized tax benefits as a component of income taxes. As of December 31, 2018 and December 31, 2017 we had no accrued interest and penalties related to income taxes. We are subject to taxes in Canada, the UK and the U.S. until the applicable statute of limitations expires. Tax audits by their very nature are often complex and can require several years to complete.
Tax |  | Years open to
Jurisdiction |  | examination
Canada |  | 2010 to 2018
United Kingdom |  | 2011 to 2018
US |  | 2010 to 2018
On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal corporate tax rate from 34 percent to 21 percent; (2) eliminating the corporate alternative minimum tax; (3) creating a new limitation on deductible interest expense; and (4) changing rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017. As a result of when the Act was signed into law, our deferred tax assets and liabilities were required to be remeasured using the lower 21% federal rate as of December 31, 2017.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration