Annual report pursuant to Section 13 and 15(d)

PROVISION FOR INCOME TAXES

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PROVISION FOR INCOME TAXES
12 Months Ended
Mar. 31, 2012
Notes to Financial Statements  
PROVISION FOR INCOME TAXES

 

NOTE 4 – PROVISION FOR INCOME TAXES

 

Reconciliation of US Federal/Canadian Statutory Income Tax Rate to Effective Income Tax Rate:

 

  March 31, 2012   March 31, 2011
United States statutory income tax rate 35.0%   35.0%
Increase (decrease) in valuation allowance (7.5)   (4.2)
Decrease in rate on income subject to Canadian income tax rates    -   (1.2)
Increase (decrease) in rate resulting from non-deductible expenses and deductible adjustments 0.1   0.1
  (7.4)   (5.3)
Effective income tax rate 27.6%   29.7%

 

Components of Income Tax Expense   March 31, 2012     March 31, 2011
Federal U.S. Income Taxes          
-Current $ -   $ -
-Deferred   17,791     -
Foreign (Canadian and Provincial) Income Taxes   1,176,020     686,211
State Income Taxes          
-Current   -     -
-Deferred   (30,360)     -
           
Total Income Tax Expense $ 1,163,451   $ 686,211

 

The following are temporary items:  non-deductible write-down of marketable securities, increase or decrease in rate resulting from depreciation and loss on equipment for book purposes in excess of depreciation for income tax purposes.  These temporary differences are insignificant, for 2012 and 2011.

 

The Company adopted the provisions of ASC 740, Accounting for Uncertainty in Income Taxes, on January 1, 2007.  As a result of the implementation of ASC 740, the Company recognized approximately no increase in the liability for unrecognized tax benefits.

 

The Company has no tax positions at March 31, 2012 and 2011 for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility.

 

The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses.  During the years ended March 31, 2012 and 2011, the Company recognized no interest and penalties.  The Company had no accruals for interest and penalties at March 31, 2012 and 2011.  

 

Net deferred tax assets arising from the warrant expense accrual as offset by the accelerated depreciation claimed by the Parent on its stand-alone tax returns is $12,569 as of March 31, 2012.