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10. INCOME TAX | 12 Months Ended
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Dec. 31, 2013
Income Tax Disclosure [Abstract] |
Note 10. INCOME TAX | The provision for income tax expense (benefit) is compromised of the following:
|  | 2013 |  |  | 2012 |
Current tax, federal |  | $ | (110,302 | ) |  | $ | 921,247 |
Current tax, state |  |  | (24,418 | ) |  |  | 205,221 |
Current tax, foreign |  |  | - |  |  |  | - |
Current tax, total |  |  | (134,720 | ) |  |  | 1,126,468 |
Deferred income tax, federal |  |  | (79,178 | ) |  |  | (73,111 | )
Deferred income tax, state |  |  | - |  |  |  | - |
Deferred income tax, foreign |  |  | (2,329,217 | ) |  |  | - |
Deferred income tax, total |  |  | (2,408,395 | ) |  |  | (73,111 | )
Total |  | $ | (2,543,115 | ) |  | $ | 1,053,357 |
The following table reconciles the income tax benefit at the U.S. Federal statutory rate to income tax benefit at the Company's effective tax rates.
|  | 2013 |  |  | 2012 |
Loss before taxes |  |  | (721,481 | ) |  |  | (31,090 | )
US statutory tax rate |  |  | 38.62 | % |  |  | 34.00 | %
Expected income tax (recovery) |  |  | (278,635 | ) |  |  | (10,571 | )
Non-deductible items |  |  | (396,793 | ) |  |  | (71,650 | )
Change in estimates |  |  | (163,928 | ) |  |  | 758 |
Change in enacted tax rate |  |  | 91,711 |  |  |  | - |
Option expired during the year |  |  | 20,878 |  |  |  | - |
Functional currency adjustments |  |  | 164,890 |  |  |  | (40,925 | )
Foreign tax rate difference |  |  | 365,377 |  |  |  | 217,576 |
Change in valuation allowance |  |  | (2,346,616 | ) |  |  | 752,948 |
Total income taxes (recovery) |  |  | (2,543,115 | ) |  |  | 848,136 |
Current income tax expenses (recovery) |  |  | (134,720 | ) |  |  | 1,126,468 |
Deferred tax expenses (recovery) |  |  | (2,408,395 | ) |  |  | (73,111 | )
Total income taxes (recovery) |  |  | (2,543,115 | ) |  |  | 1,053,357 |
Deferred taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes. Deferred tax assets (liabilities) at December 31, 2013 and 2012 are comprised of the following:
Canada |  | 2013 |  |  | 2012 |
Non capital loss carryforwards |  |  | 1,596,755 |  |  |  | 2,119,669 |
Patents |  |  | 33,936 |  |  |  | (118 | )
Fixed Assets |  |  | 698,526 |  |  |  | 199,983 |
|  |  | 2,329,217 |  |  |  | 2,319,534 |
Valuation Allowance |  |  | - |  |  |  | 2,319,534 |
Net Deferred tax asset (liability) |  |  | 2,329,217 |  |  |  | - |
USA |  |  |  |  |  |  |  |
|  |  | 2013 |  |  |  | 2012 |
Net operating loss carryforwards |  |  | - |  |  |  | 108,969 |
Fixed Assets |  |  | 348,517 |  |  |  | 272,062 |
Stock-Based Compensation |  |  | 213,662 |  |  |  | 147,051 |
|  |  | 580,178 |  |  |  | 528,082 |
Deferred tax asset not recognized |  |  | 208,889 |  |  |  | 235,971 |
Net Deferred tax asset |  |  | 371,289 |  |  |  | 292,111 |
The Company has non operating loss carryforwards of approximately $6,387,020 (2012 - $6,378,112) which may be carried forward to apply against future year income tax for Canadian income tax purposes, subject to the final determination by taxation authorities, expiring in the following years:
Expiry |  | Loss |
2014 |  |  | - |
2015 |  |  | 75,153 |
2026 |  |  | 878,698 |
2027 |  |  | 789,096 |
2028 |  |  | 707,062 |
2029 |  |  | 973,931 |
2030 |  |  | 1,017,150 |
2031 |  |  | 1,171,186 |
2032 |  |  | 765,836 |
2033 |  |  | 8,908 |
Total |  |  | 6,387,020 |
As at December 31, 2013, the Company's deferred tax asset attributable to its net operating loss carry forward is nil (2012 – $nil). Accounting for uncertainty for Income Tax Effective January 1, 2009, the Company adopted the interpretation for accounting for uncertainty in income taxes which was an interpretation of the accounting standard accounting for income taxes. This interpretation created a single model to address accounting for uncertainty in tax positions. This interpretation clarifies the accounting for income taxes, by prescribing a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. As at December 31, 2013 and 2012, the Company’s consolidated balance sheets did not reflect a liability for uncertain tax positions, nor any accrued penalties or interest associated with income tax uncertainties. The Company is subject to income taxation at the federal and state levels. The Company is subject to US federal tax examinations for the tax years 2008 through 2011. Loss carryforwards generated or utilized in years earlier than 2008 are also subject to examination and adjustment. The Company has no income tax examinations in process. The operating income shown in the income statement is on a consolidated basis. As shown in the income tax reconciliation in this Note 10, net income and net loss has been segregated so that the financial statement reader can see that the Company has a significant net income before tax in the United States, and a significant loss before tax in 'foreign' jurisdictions. On a consolidated basis, the net income earned in the United States is being offset by the losses in Canada.

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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 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: 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 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 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=6907707&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=6907707&loc=d3e32537-109319 Reference 6: 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=6907707&loc=d3e32559-109319 + Details
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