INCOME TAXES

Income taxes are recognized for the amount of taxes payable by the partnership’s corporate subsidiaries and for the impact of deferred income tax assets and liabilities related to such subsidiaries.

The major components of income tax expense include the following for the years ended December 31:



(US$ MILLIONS)	2019			2018			2017
Current income tax expense/(recovery)	$	324		$	186		$	30
Deferred income tax expense/(recovery):
Origination and reversal of temporary differences	(138		)	(61		)	(14		)
Recovery arising from previously unrecognized tax assets	(6		)	(27		)	(10		)
Change of tax rates and imposition of new legislations	12			—			2
Total deferred income taxes	(132		)	(88		)	(22		)
Income taxes	$	192		$	98		$	8

The below reconciliation has been prepared using a composite statutory-rate for jurisdictions where the partnership’s subsidiaries operate.

The partnership’s effective tax rate is different from the partnership’s composite income tax rate due to the following differences set out below:



	2019		2018		2017
Composite income tax rate	27	%	27	%	27	%
Increase (reduction) in rate resulting from:
Portion of gains subject to different tax rates	(11	)	(1	)	(6	)
International operations subject to different tax rates	(5	)	(16	)	5
Taxable income attributable to non-controlling interests	(6	)	(3	)	(18	)
Recognition of deferred tax assets	—		(2	)	(5	)
Non-recognition of the benefit of current year’s tax losses	17		1		(1	)
Change in tax rates and imposition of new legislation	4		—		—
Other	4		2		1
Effective income tax rate	30	%	8	%	3	%

Deferred income tax assets and liabilities as at December 31, 2019 and 2018 relate to the following:



(US$ MILLIONS)	December 31, 2019			December 31, 2018
Non-capital losses (Canada)	$	11		$	28
Capital losses (Canada)	—			—
Losses (U.S.)	78			72
Losses (International)	264			78
Difference in basis	(1,489		)	(765		)
Total net deferred tax (liability)/asset	$	(1,136	)	$	(587	)
Reflected in the statement of financial position as follows:
Deferred income tax assets	667			280
Deferred income tax liabilities	(1,803		)	(867		)
Total net deferred tax (liability)/asset	$	(1,136	)	$	(587	)

The deferred income tax movements are as follows:



(US$ MILLIONS)	December 31, 2019			December 31, 2018
Opening net deferred tax (liability)/asset	$	(587	)	$	(663	)
Recognized in income	132			88
Recognized in other comprehensive income	15			(2		)
Recognized in other ⁽¹⁾	(696		)	(10		)
Net deferred tax (liability)/asset	$	(1,136	)	$	(587	)

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⁽¹⁾	The Other category primarily relates to acquisitions and dispositions and the foreign exchange impact of the deferred tax asset calculated in the functional currency of the operating entities.

The following table details the expiry date, if applicable, of the unrecognized deferred tax assets:



(US$ MILLIONS)	December 31, 2019		December 31, 2018
One year from reporting date	$	19	$	10
Two years from reporting date	5		—
Three years from reporting date	5		1
After three years from reporting date	337		322
Do not expire	731		587
Total	$	1,097	$	920

The components of the income taxes in other comprehensive income for the years ended December 31, 2019, 2018, and 2017 are set out below:



(US$ MILLIONS)	2019			2018			2017
Fair value through OCI	$	—		$	(3	)	$	(1	)
Net investment hedges	(15		)	13			(8		)
Cash flow hedges	(1		)	(6		)	10
Equity accounted investments	—			—			(1		)
Pension plan actuarial changes	1			(2		)	—
Total deferred tax expense (recovery) in other comprehensive income	$	(15	)	$	2		$	—

For the year ended December 31, 2019, total current tax expense of $27 million (2018: $49 million) attributed to the current tax on disposition of subsidiaries for which control has been retained has been recorded to equity.