Income tax expense

12 Months Ended

Dec. 31, 2023

Income tax expense

Income Tax Expense

18. Income Tax Expense

Payments made to NXT for services rendered to clients and branch offices in certain countries may be subject to foreign income and withholding taxes. Such taxes incurred are only recoverable in certain limited circumstances, including potential utilization in Canada as a foreign tax credit, or against future taxable earnings from the foreign jurisdictions.

Income tax expense is different from the expected amount that would be computed by applying the statutory Canadian federal and provincial income tax rates to NXT's income (loss) before income taxes as follows:

For the years ended December 31,
	2023			2022			2021
Net loss before income taxes	$	(5,451,112	)	$	(6,733,076	)	$	(3,123,799	)
Canadian statutory income tax rate		23.0	%		23.0	%		23.0	%
Income tax (recovery) at statutory income tax rate		(1,253,756	)		(1,548,607	)		(718,474	)
Effect of non- deductible expenses and other items:
Stock-based compensation and other expenses		58,801			53,379			67,948
Change in statutory tax rates		-			(11,997	)		(92,850	)
Foreign exchange adjustments		2,754			-			662
True-up		(10,060	)		(3,280	)		-
US loss expiry and Other		437,330			(33,113	)		1,206,056
Change in valuation allowance		764,931			1,543,618			(463,342	)
Income tax expense (recovery)		-			-			-

A valuation allowance has been provided for the Company’s deferred income tax assets due to uncertainty regarding the amount and timing of their potential future utilization, as follows:

For the years ended December 31,
	2023			2022			2021
Net operating losses carried forward:
Canada (expiration dates 2027 to 2042)	$	9,594,511		$	9,136,353		$	8,051,504
USA (expiration dates 2024 to 2026)		5,631			169,359			248,289
Timing differences on property & equipment, Right
of Use of Assets, Lease obligations and financing costs		1,806,446			1,726,603			1,674,085
SRED Expenditures		676,518			676,518			575,747
Foreign Tax Credit		285,772			285,772			285,772
		12,368,878			11,994,605			10,835,397
Intellectual property		(2,638,099	)		(3,028,757	)		(3,411,411	)
Less valuation allowance		(9,730,779	)		(8,965,848	)		(7,423,986	)