Income Taxes (Tables)

12 Months Ended

Dec. 31, 2011

Notes To Financial Statements [Abstract]

Reconciliation of income tax expense

As at December 31, 2011, Deferred and receivable income taxes include a net deferred income tax asset of $46 million ($53 million as at December 31, 2010) and an income tax receivable of $76 million (nil as at December 31, 2010).

The Company's consolidated effective income tax rate differs from the Canadian, or domestic, statutory Federal tax rate. The effective tax rate is affected by recurring items such as tax rates in provincial, U.S. federal, state and other foreign jurisdictions and the proportion of income earned in those jurisdictions. The effective tax rate is also affected by discrete items such as income tax rate enactments and lower tax rates on capital dispositions that may occur in any given year. The reconciliation of income tax expense is as follows:

In millions		Year ended December 31,		2011		2010		2009
Federal tax rate				16.5%		18.0%		19.0%
Income tax expense at the statutory Federal tax rate			$	(554)	$	(518)	$	(430)
Income tax (expense) recovery resulting from:
	Provincial and foreign taxes			(360)		(308)		(213)
	Deferred income tax adjustments due to rate enactments			(40)		-		126
	Gain on disposals			62		32		42
	Other (1)			(7)		22		68
Income tax expense			$	(899)	$	(772)	$	(407)
Cash payments for income taxes			$	482	$	214	$	245
(1)	Comprises adjustments relating to the resolution of matters pertaining to prior years' income taxes, including net recognized tax benefits, and other items.

Tax information on a domestic and foreign basis

The following table provides tax information on a domestic and foreign basis:

In millions		Year ended December 31,		2011		2010		2009
Income before income taxes
	Domestic		$	2,464	$	2,052	$	1,738
	Foreign			892		824		523
			$	3,356	$	2,876	$	2,261
Current income tax expense
	Domestic		$	(340)	$	(306)	$	(244)
	Foreign			(28)		(48)		(25)
			$	(368)	$	(354)	$	(269)
Deferred income tax expense
	Domestic		$	(288)	$	(248)	$	(58)
	Foreign			(243)		(170)		(80)
			$	(531)	$	(418)	$	(138)

Significant components of deferred income tax assets and liabilities

Significant components of deferred income tax assets andliabilities are as follows:

In millions		December 31,		2011		2010
Deferred income tax assets
Pension liability			$	226	$	-
Personal injury claims and other reserves				134		155
Other postretirement benefits liability				85		88
Net operating losses and tax credit carryforwards (1)				5		11
Total deferred income tax assets				450		254
Deferred income tax liabilities
Properties				5,618		5,129
Net pension asset				-		41
Other				119		183
Total deferred income tax liabilities				5,737		5,353
Total net deferred income tax liability			$	5,287	$	5,099
Total net deferred income tax liability
Domestic			$	2,046	$	2,162
Foreign				3,241		2,937
			$	5,287	$	5,099
Total net deferred income tax liability			$	5,287	$	5,099
Net current deferred income tax asset				46		53
Net noncurrent deferred income tax liability			$	5,333	$	5,152
(1)	Net operating losses and tax credit carryforwards will expire between the years 2014 and 2031.

Reconciliation for unrecognized tax benefits for domestic and foreign tax positions

The following table provides a reconciliation of unrecognized tax benefits on the Company's domestic and foreign tax positions:

In millions		Year ended December 31,		2011		2010		2009
Gross unrecognized tax benefits at beginning of year			$	57	$	83	$	79
Increases for:
	Tax positions related to the current year			1		4		11
	Tax positions related to prior years			11		5		4
Decreases for:
	Tax positions related to prior years			-		(31)		(2)
	Settlements			(21)		-		(2)
	Lapse of the applicable statute of limitations			(2)		(4)		(7)
Gross unrecognized tax benefits at end of year			$	46	$	57	$	83
Adjustments to reflect tax treaties and other arrangements				(11)		(27)		(46)
Net unrecognized tax benefits at end of year			$	35	$	30	$	37