Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

8. Income Taxes

The components of the provision for income taxes are as follows:

Year ended December 31,	2024		2023		2022
Canadian:
Current tax expense	$	74.3	$	43.4	$	60.9
Deferred tax expense	(5.7)		(2.7)		2.7
Foreign:
Current tax expense before application of operating loss carryforwards	132.3		100.2		29.6
Tax benefit of operating loss carryforwards	(0.1)		(1.4)		(4.0)
Total current tax expense	132.2		98.8		25.6
Deferred tax (benefit)	(63.5)		(63.1)		(3.0)
Total deferred tax (benefit)	(63.5)		(63.1)		(3.0)
	$	137.3	$	76.4	$	86.2

The provision for income taxes was different from the Canadian and provincial statutory rate applied to income before taxes and is reconciled as follows:

Year ended December 31,	2024			2023			2022
Earnings before income tax	$	550.1		$	282.4		$	406.0
Statutory federal and provincial tax rate in British Columbia, Canada	27.00		%	27.00		%	27.00		%
Expected income tax expense	$	148.5		$	76.2		$	109.6
Different tax rates of subsidiaries operating in foreign jurisdictions	(10.9)			(3.7)			(6.4)
Non-deductible expenses	4.1			11.1			7.7
Executive compensation and fringe benefits	3.5			5.0			0.3
Non-taxable gain on capital items	0.1			(0.4)			(19.4)
Benefit of Foreign-Derived Intangible Income (FDII)	(3.2)			(6.9)			—
Unrecognized tax benefits	5.5			2.0			(1.5)
Equity compensation	(5.1)			(3.9)			(2.3)
Other	(5.2)			(3.0)			(1.8)
	$	137.3		$	76.4		$	86.2

Permanently reinvested undistributed pre-tax earnings of the Company's foreign subsidiaries were approximately $297.6 million for the year ended December 31, 2024 (2023: $113.1 million; 2022: $93.1 million). Earnings retained by subsidiaries as at December 31, 2024 were approximately $878.6 million (2023: $676.7 million). If the undistributed earnings of foreign subsidiaries were to be remitted, income tax expense and withholding tax expense would need to be recognized, net of any applicable foreign tax credits. It is not practicable for the Company to determine the additional tax that may be incurred upon remittance of these earnings.

The Company offsets all deferred tax assets and liabilities by tax filing jurisdiction, as well as any related valuation allowance, and presents them as a single non-current deferred income tax asset or non-current deferred income tax liability. Deferred tax assets and deferred tax liabilities were as follows:

At December 31,	2024		2023
Deferred tax assets:
Working capital	$	25.1	$	33.6
Property, plant and equipment	4.9		5.2
Share-based compensation	14.4		11.9
Tax losses and tax credit carryforwards	39.1		37.9
Lease liabilities	381.8		356.2
Notes receivable/payable	8.8		2.3
Other	17.2		9.6
Total deferred tax assets	491.3		456.7
Deferred tax liabilities:
Property, plant and equipment	$	(74.7)	$	(86.4)
Goodwill	(23.6)		(12.8)
Intangible assets	(586.6)		(653.5)
Right-of-use assets	(376.2)		(354.7)
Long-term debt	—		(0.9)
Notes receivable/payable	(17.7)		(5.6)
Other	(5.6)		(6.0)
Total deferred tax liabilities	(1,084.4)		(1,119.9)
Net deferred tax liabilities	$	(593.1)	$	(663.2)
Valuation allowance	(6.8)		(9.1)
Net deferred tax	$	(599.9)	$	(672.3)

At December 31, 2024, the Company had non-capital loss carryforwards that are available to reduce taxable income in the future years. These non-capital loss carryforwards expire as follows:

2025	$	—
2026	—
2027	0.3
2028	—
2029 and thereafter	62.4
	$	62.7

The Company has capital loss carryforwards of approximately $67.1 million (2023: $73.4 million) available to reduce future capital gains and interest deduction carryforwards of $63.5 million (2023: $60.7 million), both of which carryforward indefinitely.

Tax losses are denominated in the currency of the countries in which the respective subsidiaries are located and operate. Fluctuations in currency exchange rates could reduce the U.S. dollar equivalent value of these tax loss and tax credit carry forwards in future years.

A reconciliation of the beginning and ending amount of unrecognized tax benefits from uncertain tax positions is as follows:

At December 31,	2024		2023
Unrecognized tax benefits, beginning of year	$	25.1	$	16.0
Increases – tax positions related to acquisitions	0.3		8.0
Increases – tax positions taken in prior period	5.1		1.2
Decreases – tax positions taken in prior period	—		(0.4)
Increases – tax positions taken in current period	3.1		4.1
Settlement and lapse of statute of limitations	(5.7)		(4.0)
Effect of foreign currency translation	(1.2)		0.2
Unrecognized tax benefits, end of year	$	26.7	$	25.1

At December 31, 2024, the Company had gross unrecognized tax benefits of $26.7 million (2023: $25.1 million). Of this total, $18.7 million (2023: $13.6 million) represents the net amount of unrecognized tax benefits that, if recognized, would favorably impact the effective tax rate.

The Company records interest expense and penalties related to unrecognized tax benefits within the Company's provision for income taxes on the consolidated income statements. At December 31, 2024, the Company had accrued $4.4 million (2023: $4.4 million) for interest and penalties that have been included in the above reconciliation table, and during the year ended December 31, 2024 the Company has recognized $0.1 million recovery (2023: $0.6 million) in interest and penalties in the consolidated income statements.

The Company is routinely subject to tax audits and reviews in various jurisdictions around the world. Tax authorities may challenge the manner in which the Company has filed its tax returns and reported its income.

On December 3, 2024, the CRA issued the Company an NOA for CA$79.1 million (Canadian dollars) (approximately $55.1 million), for the taxation years 2010 through 2015, inclusive of CA$37.7 million in income taxes (approximately $26.3 million), and CA$41.4 million in interest and penalties (approximately $28.9 million). The CRA is asserting that one of the Company’s Luxembourg subsidiaries which was in operation from 2010 to 2020 was resident in Canada from 2010 through 2015 and that its worldwide income should be subject to Canadian income taxation.

The Company plans to object to the notice of assessment as it believes it is and has been in full compliance with Canadian tax laws and intends to pursue all available administrative and judicial remedies necessary to resolve this matter. As such, the Company plans to file a Notice of Objection with the CRA in March 2025 and accordingly has paid a deposit of CA$39.5 million (approximately $27.6 million) to the CRA in early February 2025, the minimum required by law as part of the CRA’s objection process. In the event that the Company prevails in its objection or subsequent legal proceedings, the deposit would be refunded with interest to the Company.

In the event that the Company’s tax filing position is not upheld by either the CRA or by a court of last resort, the Company would incur and record the amounts assessed in income tax, interest and penalties in its consolidated financial statements, which could have a material negative effect on the Company’s results of operations.

In addition, during the third quarter of 2024, the CRA has requested information regarding the 2016 to 2020 taxation years for the same matter, which the Company provided to the CRA in January 2025. The Company has not received a notice of assessment relating to the 2016 to 2020 taxation years. Depending on the outcome of this matter with the CRA, the Company could incur additional income taxes, penalties and interest relating to the 2016 to 2020 taxation years, which could have a material negative effect on its results of operations.

At December 31, 2024, the Company has not recorded any amounts relating to this matter in the consolidated financial statements because it is the Company’s conclusion that it is more likely than not that the Company’s tax filing position will ultimately be sustained.

The Company is unable to predict the ultimate outcome of this matter and the final disposition of any appeals, or litigation, which could take numerous years to resolve.