7. income taxes
The Company’s income tax expense differs from that calculated by applying statutory rates for the following reasons:
As referred to in Note 1(b), the Company must make significant estimates in respect of the composition of its future income tax asset and future income tax liability. The operations of the Company are complex, and related tax interpretations, regulations and legislation are continually changing. As a result, there are usually some tax matters in question. Temporary differences comprising the future income tax asset (liability) are estimated as follows:
The Company expects to be able to substantially utilize its non-capital losses over the next two years. The Company’s assessment is that the risk of expiry of such non-capital losses is remote.
The Company conducts research and development activities, which are eligible to earn Investment Tax Credits. During the year ended December 31, 2005, the Company recorded Investment Tax Credits of $0.4 million (2004 – $0.6 million), all of which was recorded as a reduction of Operations expense.