|12 Months Ended|
Aug. 31, 2012
|INCOME TAXES [Text Block]||
6. INCOME TAXES
The Company is subject to United States federal and state income taxes at an approximate rate of 34.0% and to Canadian federal and British Columbia provincial taxes in Canada at an approximate rate of 25.5% . The reconciliation of the provision (recovery) for income taxes at the United States federal statutory rate compared to the Company’s income tax expense is as follows:
Included in other adjustments and change in valuation allowance for the year ended August 31, 2012 is $(4,000) (2011: $35,000) relating to the effect of changes in statutory tax rates, $(12,000) (2011: ($82,000)) for the effect of changes in foreign exchange rates, $(215,000) (2011: $Nil) in respect of a change in estimates and provisions and $380,000 (2011: 227,000) in respect of the change in valuation allowance, which includes the items noted below.
During the year ended August 31, 2011, the Company recorded an adjustment to future income tax assets of $486,000 in respect of amendments to prior years’ tax return filings, as approved by Canada Revenue Agency, to capitalize software development costs and eliminate the expiration of losses. As a result, the cumulative tax benefit increased. The Company has also increased the valuation allowance against these benefits and the investment tax credits approved.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company has recognized a valuation allowance for those deferred tax assets for which realization is not more likely than not to occur.
During the year ended August 31, 2011, the Company decreased future income tax assets by $159,000 in respect of a provision for cross border tax issues. During the year ended August 31, 2012, this provision was reversed due to the resolution of these issues.
Significant components of the Company’s deferred tax assets as of August 31 are as follows:
Net income (loss) before income tax by geographic region is as follows:
If not utilized to reduce future taxable income, the Company’s net operating loss carryforwards will expire as follows:
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.
Reference 1: http://www.xbrl.org/2003/role/presentationRef