Note 12—Income Taxes

The effective income tax rates were 2% and 26% for the three and nine months ended June 30, 2016, respectively, and 22% and 28% for the three and nine months ended June 30, 2015, respectively. The effective tax rates for the three and nine months ended June 30, 2016 differ from the effective tax rates in the same periods in fiscal 2015 primarily due to:


•	a $693 million tax benefit related to a one-time $1.9 billion loss due to the effective settlement of the Framework Agreement between Visa and Visa Europe;


•	the non-taxable $255 million revaluation of the Visa Europe put option recorded in the quarter ended December 31, 2015; and


•	the absence of a one-time $239 million tax benefit resulting from the resolution of uncertain tax positions with taxing authorities in the quarter ended June 30, 2015.

During the three and nine months ended June 30, 2016, the Company's gross unrecognized tax benefits increased by $84 million and $135 million, respectively, of which $28 million and $81 million, respectively, would favorably impact the effective tax rate if recognized. The increase in gross unrecognized tax benefits is primarily related to various tax positions across several jurisdictions, including existing uncertain tax positions in Visa Europe. During the three and nine months ended June 30, 2016, the Company's accrued interest related to uncertain tax positions increased by $25 million and $32 million, respectively, and accrued penalties increased by $9 million and $10 million, respectively.

During fiscal 2013, the Canada Revenue Agency ("CRA") completed its examination of the Company's fiscal 2003 through 2009 Canadian tax returns and proposed certain assessments. Based on the findings of its examination, the CRA also proposed certain assessments to the Company's fiscal 2010 through 2015 Canadian tax returns. The Company filed notices of objection against these assessments and, in fiscal 2015, completed the appeals process without reaching a settlement with the CRA. In April 2016, the Company petitioned the Tax Court of Canada to overturn the CRA's assessments. The Company continues to believe that its income tax provision adequately reflects its obligations to the CRA.

The Company’s tax filings are subject to examination by the U.S. federal, state and foreign taxing authorities. The timing and outcome of the final resolutions of the various ongoing income tax examinations are highly uncertain. It is not reasonably possible to estimate the increase or decrease in unrecognized tax benefits within the next twelve months.

In November 2015, the FASB issued Accounting Standards Update 2015-17, which simplifies the presentation of deferred income taxes by requiring that deferred tax assets and liabilities be presented as non-current. The standard impacts presentation only. The Company elected to early adopt the standard on a retrospective basis effective October 1, 2015 and all deferred tax assets and liabilities are classified as non-current on the Company's consolidated balance sheets. All prior period amounts have been reclassified to conform with the current period presentation.