Income Taxes

12 Months Ended

Sep. 30, 2021

Income Tax Disclosure [Abstract]

Income Taxes

7. Income Taxes

Graphene & Solar Technologies Limited was formed in 2010. Prior to the acquisition of Solar Quartz Technologies Limited (SQTL) New Zealand, now known as Graphene and Solar Technologies Limited (GSTLNZ) in July 2017, the Company only had operations in the United States. In July 2017, the Company became the parent of GSTLNZ., a wholly owned New Zealand subsidiary, which files tax returns in New Zealand.

The Company provides for income taxes under ASC 740, ”Income Taxes.” Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax basis of assets and liabilities and the tax rates in effect when these differences are expected to reverse. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.

The net loss for the year ended September 30, 2021 was $34,814,944 however the stock-based compensation and the debt discount amortization of $33,793,499 and $102,139 respectively are not used in the calculations below.

For the years ended September 30, 2021 and 2020, the local (“United States of America”) and foreign components of loss before income taxes were comprised of the following:

	For the Years Ended
	September 30,
	2021			2020
Tax jurisdiction from:
- Local	$	(338,679	)	$	(564,752	)
- Foreign		(560,636	)		(538,409	)
Loss before income taxes	$	(899,315	)	$	(1,103,161	)

United States of America

Graphene & Solar Technologies Limited is subject to the tax laws of United States of America.

The income tax provision for the years ended September 30, 2021 and 2020, consists of the following:

	For the Years Ended
	September 30,
	2021			2020
Net income (loss)	$	(338,679	)	$	(564,752	)
Effective tax rate		21	%		21	%
Income tax expense (benefit)		(71,123	)		(118,598	)
Less: valuation allowance		71,123			118,598
Income tax expense (benefit)	$	—		$	—

Net deferred tax assets consist of the following components as of September 30, 2020 and 2019:

	September 30,			September 30,
	2021			2020
Net operating tax carryforwards	$	2,460,213		$	1,774,037
Valuation allowance		(2,460,213	)		(1,774,037	)
Net deferred tax asset	$	—		$	—

On December 22, 2017, the United States enacted the Tax Cuts and Jobs Act (the “Act”) resulting in significant modifications to existing law including lowering the corporate tax rate from 34% to 21%. In addition to applying the new lower corporate tax rate in 2018 and thereafter to any taxable income we may have, the legislation affects the way we can use and carry forward net operating losses previously accumulated and results in a revaluation of deferred tax assets and liabilities recorded on our balance sheet. The Company has completed the accounting for the effects of the Act during the year ended September 30, 2021. Given that current deferred tax assets are offset by a full valuation allowance, these changes will have no impact on the balance sheet.

At September 30, 2021 and 2020, the Company had $6,702,294 and $9,657,079 respectively of the U.S. net operating losses (the “U.S. NOLs”), which begin to expire beginning in 2039. NOLs generated in tax years prior to July 31, 2018, can be carryforward for twenty years, whereas NOLs generated after July 31, 2018 can be carryforward indefinitely

New Zealand

The Company’s subsidiary operating in New Zealand (“NZ”) are subject to the New Zealand Corporate Income Tax at a standard income tax rate range of 28% on the assessable income arising in New Zealand during its tax year. The reconciliation of income tax rate to the effective income tax rate for the years ended September 30, 2021 and 2020 is as follows:

	For the Years Ended
	September 30,
	2021			2020
Net income (loss)	$	(560,636	)	$	(538,409	)
Effective tax rate		28	%		28	%
Income tax expense (benefit)		(156,978	)		(150,755	)
Less: valuation allowance		156,978			150,755
Income tax expense (benefit)	$	—		$	—

Net deferred tax assets consist of the following components as of September 30, 2021 and September 30, 2020:

	September 30,			September 30,
	2021			2020
Net operating tax carryforwards	$	906,786		$	749,808
Valuation allowance		(906,786	)		(749,808	)
Net deferred tax asset	$	—		$	—

As of September 30, 2021, the operations in New Zealand incurred $560,636 of cumulative net operating losses which can be carried forward to offset future taxable income. The Company has provided for a full valuation allowance against the deferred tax assets of $1,310,444 on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.

The following table sets forth the significant components of the aggregate deferred tax assets of the Company as of September 30, 2021 and 2020:

	September 30,			September 30,
	2021			2020
Deferred tax assets:
Net operating tax carryforwards:
United States	$	2,460,214		$	1,774,047
New Zealand		906,786			749,808
Total		3,366,999			2,523,855
Valuation allowance		(3,366,999	)		(2,523,855	)
Net deferred tax asset	$	—		$	—