BriaCell Therapeutics Corp. Income Taxes Disclosure
NOTE 11: TAXES ON INCOME
a. Components of income taxes excluding cumulative effects of changes in accounting principles, other comprehensive income, and equity in net results of affiliated companies accounted for after-tax for the years ended July 31 were as follows:
b. The Company recorded loss before taxes on income as follows:
| Year ended July 31, | ||||||||
| 2025 | 2024 | |||||||
| Domestic | $ | (23,999,920 | ) | $ | 23,946,952 | ) | ||
| Foreign | (2,556,220 | ) | (28,878,500 | ) | ||||
| $ | (26,556,140 | ) | $ | (4,931,548 | ) | |||
BriaCell Therapeutics Corp
Notes to the Consolidated Financial Statements
For the Years Ended July 31, 2025 and 2024
(Expressed in US Dollars, except share and per share data and unless otherwise indicated)
NOTE 11: TAXES ON INCOME (Cont.)
c. The reconciliation of the combined Canadian federal and provincial statutory income tax rate of 27% (2024 - 27%) to the effective tax rate is as follows:
| Year ended July 31, | ||||||||
| 2025 | 2024 | |||||||
| Net loss before recovery of income taxes | $ | (26,556,140 | ) | $ | (4,931,548 | ) | ||
| Expected income tax (recovery) expense | (7,170,160 | ) | (1,331,518 | ) | ||||
| Tax rate changes and effect of taxes of subsidiaries at foreign rates | 1,448,710 | 1,467,021 | ||||||
| Share-based compensation and other non-deductible expenses | 240,070 | 1,697,204 | ||||||
| Share issuance cost booked directly to equity | (375,750 | ) | ||||||
| Adjustments in respect of prior periods | 868,490 | |||||||
| R&D Credits | (1,284,010 | ) | (3,903,153 | ) | ||||
| Effect of spin-out transaction | (297,781 | ) | ||||||
| Valuation allowance | 6,272,650 | 2,368,228 | ||||||
| Income tax (recovery) | $ | $ | ||||||
d. The Company had income tax expense for the years ended July 31, 2025, and 2024, due to its history of operating losses and valuation allowances.
e. Significant components of the Company’s deferred tax assets are as follows:
| July 31, | ||||||||
| 2025 | 2024 | |||||||
| Deferred Tax Assets: | ||||||||
| Property and equipment | $ | 730 | 731 | |||||
| Marketable Securities | 11,760 | 15,678 | ||||||
| Intellectual property | 260,860 | 256,741 | ||||||
| Warrant liability | ||||||||
| Share issuance costs | 310,230 | 376,978 | ||||||
| Investment in BC Therapeutics | 44,650 | 19,172 | ||||||
| Operating tax losses carried forward | 5,067,840 | 4,850,799 | ||||||
| Operating tax losses carried forward- USA | 8,494,300 | 5,545,125 | ||||||
| Research and Development | 14,240,640 | 10,879,373 | ||||||
| Total deferred tax assets | 28,431,010 | 21,944,597 | ||||||
| Valuation allowance | (24,329,720 | ) | (18,034,710 | ) | ||||
| Net deferred tax assets | $ | 4,101,290 | $ | 3,909,887 | ||||
| Deferred Tax Liability: | ||||||||
| Intellectual Property | $ | $ | ||||||
| Warrant liability | (4,053,520 | ) | (3,848,762 | ) | ||||
| Property, plant, and equipment | (47,770 | ) | (61,125 | |||||
| Total net deferred tax liabilities | (4,101,290 | ) | (3,909,887 | ) | ||||
| Valuation allowance | ||||||||
| Net deferred tax assets (liabilities) | $ | $ | ||||||
| f. |
The Company has net deferred tax assets relating primarily to net operating loss (“NOL”) carryforwards, research and development, and share issuance costs. Subject to certain limitations, the Company may use these deferred tax assets to offset taxable income in future periods. Due to the Company’s history of losses and uncertainty regarding future earnings, a full valuation allowance has been recorded against the Company’s deferred tax assets, as it is more likely than not that such assets will not be realized. The net change in the total valuation allowance for the year ended July 31, 2025, was $1,792,500. |
BriaCell Therapeutics Corp
Notes to the Consolidated Financial Statements
For the Years Ended July 31, 2025 and 2024
(Expressed in US Dollars, except share and per share data and unless otherwise indicated)
NOTE 11: TAXES ON INCOME (Cont.)
At July 31, 2025, the Company had US federal NOL carryforwards of approximately $40,450,000. The federal net operating losses have expiry periods ranging between 2033 and indefinitely. The Company also has Canadian net operating loss carryovers of approximately $18,770,000 as of July 31, 2025. The Canadian net operating losses have expiry periods ranging between 2035 and 2045.
The Company has adopted the provisions of ASC 740-10, which clarifies the accounting for uncertain tax positions. ASC 740-10 requires that the Company recognize the impact of a tax position in its financial statements if the position is more likely than not to be sustained upon examination based on the technical merits of the position. For the year ended July 31, 2025, the Company had no material unrecognized tax benefits, and based on the information currently available, no significant changes in unrecognized tax benefits are expected in the next 12 months.
The Company’s policy is to recognize interest and penalties related to uncertain tax positions as income tax expense. The Company has no accruals for interest or penalties on its accompanying consolidated balance sheets as of July 31, 2025, and 2024, and has not recognized interest or penalties in the consolidated statements of operations for the years ended July 31, 2025, and 2024.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Oct 16, 2025 | Showing above |
| 2024 | Oct 29, 2024 | |
| 2023 | Oct 25, 2023 | |
| 2022 | Oct 28, 2022 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.