Note 14 - Income Taxes

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Income Tax Disclosure [Text Block]

1

4

. 

Income

taxes:

Kidoz Inc. (previously Shoal Games Ltd.) is domiciled in the tax-free jurisdiction of Anguilla, British West Indies. However certain of the Company’s subsidiaries incur income taxation.

The Tax Cuts and Jobs Act ("Tax Act") was signed into law on

December 22, 2017.

Included as part of the law, was a permanent reduction in the U.S. federal corporate income tax rate from

34%

to

21%

effective

January 1, 2018.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at

December 31, 2019

and

2018,

are presented below:

	2019			2018
Computed “expected” tax benefit (expense)	$	3,255,948		$	544,495
Change in statutory, foreign tax, foreign exchange rates and other		1,620,641			(281,937	)
Permanent differences		(3,382,662	)		-
Change in valuation allowance		(643,647	)		(173,037	)
Income tax recovery	$	850,280		$	89,521

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at

December 31, 2019

and

2018

are presented below:

	2019			2018
Deferred tax assets:
Net operating loss carry forwards	$	919,493		$	275,846
Valuation Allowance		(919,493	)		(275,846	)
	$	-		$	-

The valuation allowance for deferred tax assets as of

December 31, 2019

and

2018,

was

$919,493

and

$275,846,

respectively. The net change in the total valuation allowance was an increase of

$643,647

for the year ended

December 31, 2019 (

2018

-

$173,037

).

As at

December 31, 2019,

the Company’s had

$3,903,000

of non-capital losses expiring through

December 31, 2039.

In assessing the realizability 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 the generation of future taxable income during the periods in which those differences become deductible.

Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in assessing the realizability of deferred tax assets. 

During the year ended

December 31, 2019,

Shoal Media (Canada) Inc., a subsidiary of Kidoz Inc., received the British Columbia Interactive Digital Media Tax Credit of

CAD$130,145

(

$98,075

) (

2018

-

CAD$116,085

(

$89,521

)) from the British Columbia Provincial Government.

The Company recognized this tax credit as a recovery of income tax expense on the statement of operations upon receipt of funds.