Income Taxes (Tables)

12 Months Ended

Dec. 31, 2013

Notes To Financial Statements [Abstract]

Reconciliation of income tax expense

As at December 31, 2013, Deferred and receivable income taxes include a net deferred income tax asset of $74 million ($43 million as at December 31, 2012) and an income tax receivable of $63 million(nil as at December 31, 2012).

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 following table provides a reconciliation of income tax expense:

In millions		Year ended December 31,		2013		2012		2011
Federal tax rate				15.0%		15.0%		16.5%
Income tax expense at the statutory Federal tax rate			$	(538)	$	(549)	$	(554)
Income tax recovery (expense) resulting from:
	Provincial and foreign taxes			(423)		(425)		(360)
	Deferred income tax adjustments due to rate enactments			(24)		(35)		(40)
	Gain on disposals			9		44		62
	Other (1)			(1)		(13)		(7)
Income tax expense			$	(977)	$	(978)	$	(899)
Cash payments for income taxes			$	890	$	289	$	482
(1)	Comprises of 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,		2013		2012		2011
Income before income taxes
	Domestic		$	2,445	$	2,656	$	2,464
	Foreign			1,144		1,002		892
			$	3,589	$	3,658	$	3,356
Current income tax expense
	Domestic		$	(404)	$	(314)	$	(340)
	Foreign			(242)		(213)		(28)
			$	(646)	$	(527)	$	(368)
Deferred income tax expense
	Domestic		$	(279)	$	(370)	$	(288)
	Foreign			(52)		(81)		(243)
			$	(331)	$	(451)	$	(531)

Significant components of deferred income tax assets and liabilities

The following table provides the significant components of deferred income tax assets andliabilities:

In millions		December 31,		2013		2012
Deferred income tax assets
Pension liability			$	89	$	149
Personal injury and legal claims				64		64
Environmental and other reserves				171		130
Other postretirement benefits liability				77		80
Net operating losses and tax credit carryforwards (1)				19		4
Total deferred income tax assets				420		427
Deferred income tax liabilities
Properties				6,232		5,686
Net pension asset				438		-
Other				213		253
Total deferred income tax liabilities				6,883		5,939
Total net deferred income tax liability			$	6,463	$	5,512
Total net deferred income tax liability
Domestic			$	2,920	$	2,267
Foreign				3,543		3,245
			$	6,463	$	5,512
Total net deferred income tax liability			$	6,463	$	5,512
Net current deferred income tax asset				74		43
Net noncurrent deferred income tax liability			$	6,537	$	5,555
(1)	Net operating losses and tax credit carryforwards will expire between the years 2014 and 2033.

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,		2013		2012		2011
Gross unrecognized tax benefits at beginning of year			$	36	$	46	$	57
Increases for:
	Tax positions related to the current year			2		1		1
	Tax positions related to prior years			4		3		11
Decreases for:
	Tax positions related to prior years			(4)		-		-
	Settlements			(8)		(13)		(21)
	Lapse of the applicable statute of limitations			-		(1)		(2)
Gross unrecognized tax benefits at end of year			$	30	$	36	$	46
Adjustments to reflect tax treaties and other arrangements				(5)		(6)		(11)
Net unrecognized tax benefits at end of year			$	25	$	30	$	35