INCOME TAXES

6 Months Ended

Mar. 31, 2020

The Company has losses carried forward for income tax purposes through March 31, 2020. There are no current or deferred tax expenses for the six months ended March 31, 2020 and 2019 due to the Company’s tax loss position. The Company has fully reserved for any benefits of these losses utilizing a statutory federal income tax rate of 21%. The deferred tax consequences of temporary differences in reporting items for financial statement and income tax purposes are recognized, as appropriate. Realization of the future tax benefits related to the deferred tax assets is dependent on many factors, including the Company’s ability to generate taxable income within the net operating loss carry-forward period. Management has considered these factors in reaching its conclusion as to the valuation allowance for financial reporting purposes.

The deferred income tax asset for the six months ended March 31, 2020 and 2019 consists of the following:

	2020			2019

Deferred income tax asset attributed to:
Current operations	$	61,159		$	13,514
Less: Change in valuation allowance		(61,159	)		(13,514	)
Net refundable amount	$	-		$	-

The composition of the Company’s deferred tax assets as at March 31, 2020 and September 30, 2019 are as follows:

	March 31, 2020			Sept. 30, 2019

Income tax operating loss carryforward	$	3,574,226		$	3,282,991

Statutory federal income tax rate		21	%		21	%
Effective income rate		0	%		0	%

Deferred tax assets:
Net operating loss carryforward	$	677,087		$	615,928
Amortization of intangible assets		73,500			73,500
Total deferred tax assets		750,587			689,428
Less: valuation allowance		(750,587	)		(689,428	)
Net deferred tax asset		-			-

The potential income tax benefit of these losses has been offset by a full valuation allowance.

As of March 31, 2020, the Company has an unused net operating loss carry-forward balance of approximately $3,574,000 that is available to offset future taxable income. This unused net operating loss carry-forward balance expires between 2026 and 2039.

The issuance of 2,532,054 shares of common stock during the year ended September 30, 2014 affected a change in control of the Company. Due to the change in control, the tax loss carryforward may only be used on a formula basis under IRS section 382 which will affect the benefit the Company can gain from the tax loss.

The Company has not filed federal income tax returns for more than five years. Management believes that due to the large net operating loss carryforward and the lack of any net taxable income during the Company’s history it is not liable for any income tax. Management intends to file the past due income tax returns during the fiscal year ending September 30, 2021.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References + Details

Creative Waste Solutions, Inc. 10-Q