Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

Components of income tax expense are as follows (in millions):



	Year Ended December 31,
	2018		2017		2016
Current income tax expense:
State income tax	$	3	$	1	$	2
Canadian federal and provincial income tax	63		27		83
Total current income tax expense	$	66	$	28	$	85

Deferred income tax expense/(benefit):
Canadian federal and provincial income tax	$	132	$	16	$	(60	)
Total deferred income tax expense/(benefit)	$	132	$	16	$	(60	)
Total income tax expense	$	198	$	44	$	25

Summary of differences between tax expense based on the statutory federal income tax rate and the effective income tax expense

The difference between income tax expense based on the statutory federal income tax rate and our effective income tax expense is summarized as follows (in millions):



	Year Ended December 31,
	2018			2017			2016
Income before tax	$	2,414		$	902		$	755
Partnership earnings not subject to current Canadian tax	(1,690		)	(756		)	(723		)
	$	724		$	146		$	32
Canadian federal and provincial corporate tax rate	27		%	27		%	27		%
Income tax at statutory rate	$	195		$	39		$	8

Canadian withholding tax	$	—		$	2		$	13
Canadian permanent differences and rate changes	—			2			2
State income tax	3			1			2
Total income tax expense	$	198		$	44		$	25

Deferred tax assets and liabilities

Deferred tax assets and liabilities are aggregated by the applicable tax paying entity and jurisdiction and result from the following (in millions):



	December 31,
	2018			2017
Deferred tax assets:
Derivative instruments	$	—		$	74
Book accruals in excess of current tax deductions	21			22
Net operating losses	2			3
Total deferred tax assets	23			99

Deferred tax liabilities:
Property and equipment in excess of tax values	(449		)	(455		)
Derivative instruments	(31		)	—
Other	(42		)	(50		)
Total deferred tax liabilities	(522		)	(505		)
Net deferred tax liabilities	$	(499	)	$	(406	)

Balance sheet classification of deferred tax assets/(liabilities):
Other long-term assets, net	$	2		$	3
Other long-term liabilities and deferred credits	(501		)	(409		)
	$	(499	)	$	(406	)