Achieve Life Sciences, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Income Tax (Tables)

Income Tax (Tables)

12 Months Ended

Dec. 31, 2012

Reconciliation of income tax attributable to operations


(In thousands)	2012			2011			2010
	$			$			$
Income taxes at statutory rates (at a rate of 34% for all periods presented)		(7,152	)		(4,989	)		(5,298	)
Expenses not deducted for tax purposes		(1,212	)		(2,366	)		425
Effect of tax rate changes on deferred tax assets and liabilities		—			—			—
Effect of foreign tax (Canadian) rate changes on deferred tax assets and liabilities		1,672			1,326			614
Reduction in benefit of operating losses		15			16			1,939
Reduction in the benefit of other tax attributes		551			468			394
Impact of withholding tax		—			—			(3,000	)
Foreign exchange effect on valuation allowance		—			—			(534	)
Investment tax credits		(485	)		(588	)		(252	)
Research and development tax credits		—			—			—
Change in valuation allowance		6,324			6,175			2,620
Part VI.I tax deduction		—			—			—
Book to tax return adjustments		287			(42	)		92
Other		—			—			—

Income tax expense		—			—			(3,000	)

Summary of investment tax credits and non-capital losses and net operating losses


	Investment Tax Credits		Net Operating Losses		Non-capital Losses
	$		$		$
2011		—		47		—
2012		—		44		—
2013		—		—		—
2014		—		—		1,707
2015		—		—		—
2016		—		—		—
2017		—		—		—
2018		—		10,795		—
2019		—		32		—
2020		—		2,745		—
2021		2		400		—
2022		2		11,766		—
2023		1		10,785		—
2024		—		16,814		—
2025		—		2,062		7,407
2026		244		27,157		4,982
2027		71		22,225		5,650
2028		148		12,648		2,410
2029		317		4,357		—
2030		346		5,034		6,124
2031		486		6,210		12,782
2032		364		8,396		17,276

		1,981		141,517		58,338

Significant components of Company's deferred tax assets


	2012			2011
Deferred tax assets:	$			$
Tax basis in excess of book value of assets		930			1,181
Non-capital loss carryforwards		62,489			55,499
Research and development deductions and credits		6,212			5,672
Share issue costs		—			42
Stock options		2,077			1,632
Capital loss carryforward		51			51
Restructuring liability		1,799			2,611
Foreign tax credit		—			—
Other		51			211

Total deferred tax assets		73,609			66,899
Valuation allowance		(73,609	)		(66,899	)

Reconciliation of the unrecognized tax benefits of uncertain tax positions


	December 31, 2012
(in thousands)	$
Balance as of December 31, 2010		2,007
Additions based on tax positions related to the current year		87
Deductions based on tax positions related to the current year		(158	)

Balance as of December 31, 2011		1,936
Additions based on tax positions related to the current year		55
Deductions based on tax positions related to the current year		(24	)

Balance as of December 31, 2012		1,967

Summary of years open to examination under different Jurisdiction


Tax Jurisdiction	Years open to examination
Canada		2006 to 2012
US		2006 to 2012

- Definition

Tabular disclosure of income tax examinations that an enterprise is currently subject to or that have been completed in the current period typically including a description of the examination, the jurisdiction conducting the examination, the tax year(s) under examination, the likelihood of an unfavorable settlement, the range of possible losses, the liability recorded, the increase or decrease in the liability from the prior period, and any penalties and interest that have been recorded.

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