NOVAGOLD RESOURCES INC Income Taxes Disclosure

NOTE 16 – INCOME TAXES

 

The Company’s combined federal and provincial statutory tax rate is 27% and is expected to remain unchanged until at least 2026.

 

The Company’s Income tax expense (recovery) consisted of:

 

		Years ended November 30,
		2025				2024				2023
Current:
Canada		$	—			$	—			$	—
Foreign			—				724				39
			—				724				39
Deferred:
Canada			—				—				—
Foreign			—				—				—
			—				—				—
Income tax (recovery) expense		$	—			$	724			$	39

 

The Company’s Loss before income taxes consisted of:

 

		Years ended November 30,
		2025				2024				2023
Canada		$	(59,391	)		$	289			$	(18,213	)
Foreign			(35,268	)			(45,186	)			(28,551	)
		$	(94,659	)		$	(44,897	)		$	(46,764	)

 

 

The Company’s Income tax (recovery) expense differed from the amounts computed by applying the Canadian statutory corporate income tax rates for the following reasons:

 

						Years ended November 30,
						2025								2024								2023
Loss before income taxes						$	(94,659	)						$	(44,897	)						$	(46,764	)
Federal Income Tax Rate							15.00	%							15.00	%							15.00	%
British Columbia Income Tax Rate							12.00	%							12.00	%							12.00	%
Statutory income tax rate							27.00	%							27.00	%							27.00	%
Combined federal and provincial statutory tax rate			27.0	%			(25,558	)			27.0	%			(12,122	)			27.0	%			(12,626	)
Reconciling items:
Non-deductible expenditures			-13.5	%			12,806				-4.9	%			2,207				-5.9	%			2,767
Foreign accrual property income			-1.6	%			1,539				-3.8	%			1,715				-3.6	%			1,682
Effect of different statutory tax rates on earnings or losses of subsidiaries			0.5	%			(503	)			0.8	%			(359	)			0.9	%			(407	)
Withholding taxes			—				—				-0.2	%			99				—				—
Change in valuation allowance on deferred tax assets			-15.5	%			14,686				-20.4	%			9,144				-18.5	%			8,623
Share issuance costs			3.1	%			(2,968	)			—				—				—				—
Other			0.0	%			(2	)			-0.1	%			40				—				—
Income tax (recovery) expense			0.0	%		$	—				-1.6	%		$	724				-0.1	%		$	39

 

Components of the Company’s deferred income tax assets (liabilities) are as follows:

 

		As of November 30,
		2025				2024
Deferred tax income assets:
Net operating loss carry forwards		$	209,567			$	200,693
Capital loss carry forwards			46,632				46,528
Mineral properties			606				605
Intangible assets			449				448
Property and equipment			11				183
Share issuance costs			2,380				—
Investment in affiliates			51,944				48,486
Unpaid interest expense			—				2,105
Unrealized loss on investments			1				56
Asset retirement obligation			121				183
Other			880				970
			312,591				300,257
Valuation allowances			(312,032	)			(299,829	)
			559				428
Deferred income tax liabilities:
Term Deposits			(120	)			—
Capitalized assets and other			(333	)			(428	)
Available For Sale Investments			(106	)			—
			(559	)			(428	)
Net deferred income tax assets (liabilities)		$	—			$	—

 

Net operating losses available to offset future taxable income are as follows:

 

Fiscal Year of Expiry		U.S.				Canada
2026		$	13,382			$	17,290
2027			18,493				1,726
2028			85				—
2029			11,223				11,187
2030			10,916				14,887
2031			16,580				14,816
2032			309,772				18,082
2033			14,529				13,645
2034			15,607				9,817
2035			16,383				8,965
2036			14,764				8,822
2037			14,111				5,866
2038			—				5,978
2039			—				5,419
2040			—				6,454
2041			—				—
2042			—				6,659
2043			—				5,004
2044			—				9,790
2045			—				12,002
Indefinite			113,835				—
		$	569,680			$	176,409

 

U.S. net operating losses arising in tax years ending after December 31, 2017 can be carried over to each taxable year following the tax year of loss (indefinitely). The Company has capital loss carry-forwards of approximately $345,420 as of November 30, 2025 (November 30, 2024: $344,655) for Canadian tax purposes. These tax losses are carried forward indefinitely.

 

Future use of U.S. loss carry-forwards is subject to certain limitations under provisions of the Internal Revenue Code pursuant to Section 382, which relates to a 50 percent change in ownership over a rolling three-year period and are further dependent upon the Company attaining profitable operations. Ownership changes occurred on January 22, 2009 and December 31, 2012. Accordingly, the Company’s ability to use these losses may be limited or they may expire un-utilized. Losses incurred to date may be further limited if a subsequent change in control occurs.

 

Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax asset. Significant pieces of objective negative evidence evaluated include the cumulative loss incurred as of November 30, 2025. Such objective evidence limits the ability to consider other subjective evidence such as management’s projections for future growth. On the basis of this evaluation, as of November 30, 2025, a valuation allowance of $312,032 (November 30, 2024: $299,829), has been recorded in order to measure only the portion of the deferred tax asset that more likely than not will be realized. However, the amount of deferred tax asset considered realizable may change if estimates of future taxable income during the carryforward period are positive or if objective negative evidence in the form of cumulative losses is no longer present in which case additional weight may be given to subjective evidence such as management’s projections for growth.

 

Uncertain tax position

 

There were no uncertain tax positions as of November 30, 2025, 2024 and 2023. The Company recognizes interest and penalties related to uncertain tax positions, if any, as income tax expense. Accrued interest and penalties are included within the related tax liability line in the consolidated balance sheet. As of November 30, 2025, 2024 and 2023, there were no accrued interest and penalties related to uncertain tax positions. The Company is subject to income taxes in Canada and the United States. With few exceptions, the tax years that remain subject to examination as of November 30, 2025, are 2021 to 2025 in Canada and 2021 to 2025 in the United States.