Lexaria Bioscience Corp. Income Taxes Disclosure
11. Income Taxes
The following table reconciles the income tax benefit at the U.S. Federal statutory rate to income tax benefit at the Company’s effective tax rates as of August 31, 2025 and 2024:
|
| August 31 2025 |
|
| August 31 2024 |
| ||
|
| $ |
|
| $ |
| ||
Loss before taxes |
|
| (11,911,434 | ) |
|
| (5,808,654 | ) |
Expected income tax recovery |
|
| (2,947,139 | ) |
|
| (1,255,377 | ) |
Non-deductible items |
|
| (1,400,185 | ) |
|
| (532 | ) |
Change in estimates |
|
| 1,666,152 |
|
|
| 119,349 |
|
Effect of changes in foreign and long-term tax rates |
|
| - |
|
|
| - |
|
Change in valuation allowance |
|
| 2,681,172 |
|
|
| 1,138,779 |
|
Total income taxes |
|
| - |
|
|
| 2,219 |
|
Deferred taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes. Deferred tax assets at August 31, 2025 and 2024 are comprised of the following:
|
| August 31 2025 |
|
| August 31 2024 |
| ||
|
| $ |
|
| $ |
| ||
Non-capital losses |
|
| 10,187,630 |
|
|
| 8,738,277 |
|
Marketable securities |
|
| 349,121 |
|
|
| (14,051 | ) |
Stock based compensation |
|
| 934,641 |
|
|
| 754,147 |
|
R&D |
|
| 1,943,235 |
|
|
| 1,348,082 |
|
PPE and intangibles |
|
| (6,392 | ) |
|
| (95,179 | ) |
Accrued vacation |
|
| 4,213 |
|
|
| - |
|
Total deferred tax assets |
|
| 13,412,448 |
|
|
| 10,731,276 |
|
Valuation Allowance |
|
| (13,412,448 | ) |
|
| (10,731,276 | ) |
Net Deferred tax assets |
|
| - |
|
|
| - |
|
The Company has net operating loss carryforwards of approximately $47 million which may be carried forward to apply against future year income tax for U.S. tax purposes.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the United States. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions in the Tax Cut and Jobs Act, modifications to the international tax framework, and restoration of favorable tax treatment for certain business provisions. The Company is currently assessing the OBBBA’s impact on its consolidated financial statements, which is expected to be immaterial.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Nov 28, 2025 | Showing above |
| 2024 | Nov 26, 2024 | |
| 2023 | Nov 20, 2023 | |
| 2022 | Nov 28, 2022 | |
| 2021 | Nov 29, 2021 | |
| 2020 | Oct 15, 2020 | |
| 2019 | Nov 14, 2019 | |
| 2018 | Nov 14, 2018 | |
| 2017 | Nov 27, 2017 | |
| 2016 | Nov 29, 2016 | |
| 2015 | Nov 27, 2015 | |
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.