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Income Taxes

12 Months Ended

Jun. 30, 2019

Income Tax Disclosure [Abstract]

INCOME TAXES

Note 10 – income taxes

The Company was incorporated in the United States of America, is subject to U.S. tax and plans to file U.S. federal income tax returns. The Company conducts all of its businesses through its subsidiaries and affiliated entities, principally in the PRC. No provision for US federal income tax was made for the year ended June 30, 2018 as the US entity incurred losses. For the year ended June 30, 2019, US entity had $23,764 of net income from interest income.

The Company's offshore subsidiary, Shuhai Skill (HK), did not earn any income that was derived in Hong Kong for the years ended June 30, 2019 and 2018 and therefore did not incur any Hong Kong Profits tax.

Under the Corporate Income Tax Law of the PRC, the corporate income tax rate is 25%. The Company received a tax holiday with a 15% corporate income tax rate since it qualified as a high-tech company.

The Company has generated net operating losses ("NOL") of $1,425,181 and $1,604,141 during years ended June 30, 2019 and 2018, respectively. As of June 30, 2019, the Company has approximately $1,454,000 of NOL related to its PRC subsidiaries and VIEs that expire in years 2019 through 2023. In assessing the realization of 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 future generation for taxable income during the periods in which temporary differences representing net future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. After consideration of all the information available, management believes that significant uncertainty exists with respect to future realization of the deferred tax assets and has therefore established a full valuation allowance as of July 31, 2019 and 2018.

The following table reconciles the U.S. statutory rates to the Company's effective tax rate for the years ended June 30, 2019 and 2018:

		Years ended June 30,
		2019				2018
Statutory U.S. tax rate			21	%			21	%
Effect of PRC statutory tax rate			-7	%			-7	%
Valuation allowance			-14	%			-14	%
Effective tax rate			0	%			0	%

The provisions for income taxes is summarized as follows:

		Year ended June 30, 2019				Year ended June 30, 2018
Current		$	-			$	-
Deferred			213,777				401,036
Increase in valuation allowance			(213,777	)			(401,036	)
Total		$	-			$	-

The Company's net deferred tax asset as of June 30, 2019 and 2018 is as follows:

		June 30, 2019				June 30, 2018
Deferred tax asset		$	1,199,872			$	986,095
Valuation allowance			(1,199,872	)			(986,095	)
Net deferred tax asset		$	-			$	-

The valuation allowance increased by $213,777 and $401,036 for the years ended June 30, 2019 and 2018, respectively.

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- References

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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://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-URI http://asc.fasb.org/topic&trid=2144680

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