v3.22.2.2
Income Taxes
 9 Months Ended
Sep. 30, 2022
Income Tax Disclosure [Abstract]  
Income Taxes

12. Income Taxes

 

(a)
Income Tax Expense

For the three months ended September 30, 2022, the Company recorded income tax expense of $2.3 million (2021 — $4.4 million). For the three months ended September 30, 2022, the Company's effective tax rate differs from the combined Canadian federal and provincial statutory income tax rate due to the following factors:

 

Three Months Ended

 

 

Three Months Ended

 

 

September 30, 2022

 

 

September 30, 2021

 

(In thousands of U.S. Dollars, except rates)

Amount

 

 

Rate

 

 

Amount

 

 

Rate

 

Income tax benefit at combined statutory rates

$

1,434

 

 

26.5%

 

 

$

514

 

 

26.5%

 

Adjustments resulting from:

 

 

 

 

 

 

 

 

 

 

 

Change of valuation allowance

 

(4,264

)

 

(78.8%)

 

 

 

(4,270

)

 

(219.9%)

 

Shortfall tax benefits related to share-based compensation

 

(2

)

 

 

—

 

 

 

(4

)

 

(0.2%)

 

Changes to tax reserves

 

(176

)

 

(3.3%)

 

 

 

(215

)

 

(11.1%)

 

Changes to deferred tax assets and liabilities resulting from audit and other tax return adjustments

 

(102

)

 

(1.9%)

 

 

 

454

 

 

 

23.4

%

Other non-deductible/non-taxable items

 

762

 

 

 

14.1

%

 

 

(881

)

 

(45.4%)

 

Income tax expense

$

(2,348

)

 

(43.4%)

 

 

$

(4,402

)

 

(226.7%)

 

 

For the three months ended September 30, 2022, the Company recorded an additional $4.3 million (2021 — $4.3 million) valuation allowance against deferred tax assets in jurisdictions where management cannot reliably forecast that sufficient future tax liabilities will arise in specific jurisdictions, which includes the impact of the COVID-19 pandemic. Accordingly, the tax benefit associated with the current period losses in these jurisdictions is not ultimately reflected in the Company's Condensed Consolidated Statements of Operations.

For the nine months ended September 30, 2022, the Company recorded income tax expense of $8.1 million (2021 — $9.4 million). For the nine months ended September 30, 2022, the Company's effective tax rate differs from the combined Canadian federal and provincial statutory income tax rate due to the following factors:

 

Nine Months Ended

 

 

Nine Months Ended

 

September 30, 2022

 

 

September 30, 2021

(In thousands of U.S. Dollars, except rates)

Amount

 

 

Rate

 

 

Amount

 

 

Rate

Income tax benefit at combined statutory rates

$

4,205

 

 

26.5%

 

 

$

3,588

 

 

26.5%

Adjustments resulting from:

 

 

 

 

 

 

 

 

 

 

Change of valuation allowance

 

(14,699

)

 

(92.6%)

 

 

 

(14,248

)

 

(105.2%)

(Shortfall) excess tax benefits related to share-based compensation

 

(154

)

 

(1.0%)

 

 

 

709

 

 

5.2%

Changes to tax reserves

 

(587

)

 

(3.7%)

 

 

 

1,234

 

 

9.1%

Gain on sale of Maoyan investment not taxable

 

—

 

 

 

—

 

 

 

1,367

 

 

10.1%

Withholding taxes resulting from management's decision to no longer indefinitely reinvest the historical earnings of certain foreign subsidiaries

 

—

 

 

 

—

 

 

 

(547

)

 

(4.0%)

Changes to deferred tax assets and liabilities resulting from audit and other tax return adjustments

 

2,395

 

 

15.1%

 

 

 

(246

)

 

(1.8%)

Other non-deductible/non-taxable items

 

749

 

 

4.7%

 

 

 

(1,273

)

 

(9.4%)

Income tax expense

$

(8,091

)

 

(51.0%)

 

 

$

(9,416

)

 

(69.5%)

 

For the nine months ended September 30, 2022, the Company recorded an additional $14.7 million (2021 — $14.2 million) valuation allowance against deferred tax assets in jurisdictions where management cannot reliably forecast that sufficient future tax liabilities will arise in specific jurisdictions, which includes the impact of the COVID-19 pandemic. Accordingly, the tax benefit associated with the current period losses in these jurisdictions is not ultimately reflected in the Company's Condensed Consolidated Statements of Operations.

As of September 30, 2022, the Company's Condensed Consolidated Balance Sheets include net deferred income tax assets of $14.4 million, net of a valuation allowance of $61.8 million (December 31, 2021 — $13.9 million, net of a valuation allowance of $46.0 million). The valuation allowance will be reversed when and if management determines it is more likely than not that the Company will incur sufficient tax liabilities to allow it to utilize the deferred tax assets against which the valuation allowance is recorded. Despite the valuation allowance recorded against its deferred tax assets, the Company remains entitled to benefit from tax attributes which currently have a valuation allowance applied to them.

(b)
Income Tax Effect on Other Comprehensive Loss

 

For the three and nine months ended September 30, 2022 and 2021, the Income Tax Expense related to the components of Other Comprehensive Loss is as follows:

 

 

Three Months Ended

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(In thousands of U.S. Dollars)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Unrealized change in cash flow hedging instruments

 

$

411

 

 

$

199

 

 

 

$

488

 

 

 

$

42

 

Realized change in cash flow hedging instruments

 

 

(19

)

 

 

82

 

 

 

 

(44

)

 

 

 

358

 

Reclassification of unrealized change in ineffective cash flow hedging instruments

 

 

—

 

 

 

7

 

 

 

 

—

 

 

 

 

83

 

Defined benefit and postretirement benefit plans

 

 

(12

)

 

 

(12

)

 

 

 

(36

)

 

 

 

(37

)

 

 

$

380

 

 

$

276

 

 

 

$

408

 

 

 

$

446