INTELLIGENT BIO SOLUTIONS INC. Income Taxes Disclosure

NOTE 17. INCOME TAX

 

The Company computes income taxes using the asset and liability method in accordance with FASB ASC Topic 740, Income Taxes. Under the asset and liability method, we determine deferred income tax assets and liabilities based on the differences between the financial reporting and tax bases of assets and liabilities and measure them using currently enacted tax rates and laws. The Company provides a valuation allowance for deferred tax assets that, based on available evidence, are more likely than not to be realized. Realization of our net operating loss carryforward was not reasonably assured as of June 30, 2025 and 2024, and the Company has recorded a valuation allowance of $12,698,469 and $10,421,568, respectively against deferred tax assets in excess of deferred tax liabilities.

 

The components of net deferred taxes are as follows:

 SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES

 

		June 30, 2025				June 30, 2024
		Year Ended June 30,
		June 30, 2025				June 30, 2024
Deferred tax assets:
Net operating loss - U.S.		$	5,206,430			$	4,182,278
Net operating loss - Foreign			7,293,562				6,090,380
Operating lease liabilities			18,342				-
Employee benefits			275,950				118,132
Inventory adjustments			-				(1,124	)
Foreign exchange			(80,599	)			31,902
Deferred tax assets			12,713,685				10,421,568
Less: valuation allowance			(12,698,469	)			(10,421,568	)
Deferred tax assets after valuation allowance			15,216				-
Deferred tax liabilities:
Operating lease right-of-use assets			(15,216	)			-
Deferred tax liabilities			(15,216	)			-
Net deferred tax asset		$	-			$	-

 

Our statutory income tax rate is expected to be approximately 21%. The provision for income taxes consisted of the following:

 SCHEDULE OF PROVISION FOR INCOME TAXES

		2025				2024
		Year Ended June 30,
		2025				2024
Current		$	-			$	-
Deferred			-				-
Total		$	-			$	-

 

A reconciliation of statutory tax rates to effective tax rates were as follows in each of the periods presented:

 SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILIATION

		2025				2024
		Year Ended June 30,
		2025				2024
Federal income taxes at statutory rate			21.0	%			21.0	%
Different tax rate of subsidiary			0.8	%			1.1	%
Permanent differences			(4.2	)%			(2.8	)%
Cumulative adjustment to deferred taxes			4.2	%			(9.1	)%
Return to provision			(0.7)	%			0.0	%
Change in state tax rates and other			0.4	%			(0.2	)%
Change in valuation allowance			(21.5	)%			(10.0	)%
Effective tax rate			-	%			-	%

 

 

Deferred tax assets and liabilities reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and (b) operating loss and tax credit carryforwards. Significant components of our deferred tax assets and liabilities were as follows for each of the dates presented:

 SCHEDULE OF RECONCILIATION OF INCOME TAX EXPENSE (BENEFIT)

 

		2025				2024
		Year Ended June 30,
		2025				2024
U.S. federal statutory rate applies to pretax income (loss)		$	(2,227,026	)		$	(1,848,116	)
Different tax rate of subsidiary			(82,675	)			(99,401	)
Permanent differences			444,887				246,168
Cumulative adjustment to deferred taxes			(444,694	)			797,234
Return to provision			74,111				-
Change in state tax rates and other			(41,504	)			13,250
Change in valuation allowance			2,276,901				890,865
Total income tax provision (benefit)		$	-			$	-

 

As of June 30, 2025 and 2024, the company had federal and foreign income tax net operating loss carry forwards of $59,006,727 and $49,097,053, respectively, which expire at various dates ranging from 2038 through unlimited expiration.