Income taxes (Tables)

12 Months Ended

Dec. 31, 2016

In millions		Year ended December 31,		2016		2015		2014
Canadian statutory federal tax rate				15%		15%		15%
Income tax expense at the Canadian statutory federal tax rate			$	739	$	731	$	654
Income tax expense (recovery) resulting from:
	Provincial and foreign taxes ⁽¹⁾			532		550		531
	Deferred income tax adjustments due to rate enactments ⁽²⁾			7		42		-
	Gain on disposals ⁽³⁾			(12)		(11)		(19)
	Other ⁽⁴⁾			21		24		27
Income tax expense			$	1,287	$	1,336	$	1,193
Cash payments for income taxes			$	653	$	725	$	722

(1)	Includes mainly the impact of Canadian provincial taxes and U.S. federal and state taxes.
(2)	Includes the net income tax expense resulting from the enactment of provincial corporate income tax rates.
(3)	Relates to the permanent differences arising from lower capital gain tax rates on the gain on disposal of the Company’s properties in Canada.
(4)	Includes adjustments relating to the resolution of matters pertaining to prior years' income taxes, including net recognized tax benefits, and other items.

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

In millions	Year ended December 31,		2016		2015		2014
Income before income taxes
Domestic		$	3,726	$	3,437	$	3,042
Foreign			1,201		1,437		1,318
Total income before income taxes		$	4,927	$	4,874	$	4,360
Current income tax expense
Domestic		$	568	$	640	$	522
Foreign			15		96		255
Total current income tax expense		$	583	$	736	$	777
Deferred income tax expense
Domestic		$	450	$	328	$	271
Foreign			254		272		145
Total deferred income tax expense		$	704	$	600	$	416

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

In millions		December 31,		2016		2015
Deferred income tax assets
Pension liability			$	130	$	147
Personal injury and legal claims				66		64
Environmental and other reserves				166		179
Other postretirement benefits liability				83		82
Unrealized foreign exchange losses				58		124
Net operating losses and tax credit carryforwards ⁽¹⁾				23		26
Total deferred income tax assets			$	526	$	622
Deferred income tax liabilities
Properties			$	8,673	$	8,303
Pension asset				243		348
Other				83		76
Total deferred income tax liabilities			$	8,999	$	8,727
Total net deferred income tax liability			$	8,473	$	8,105
Total net deferred income tax liability
Domestic			$	3,334	$	3,074
Foreign				5,139		5,031
Total net deferred income tax liability			$	8,473	$	8,105

(1)	Net operating losses and tax credit carryforwards will expire between the years 2018 and 2036.

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,		2016		2015		2014
Gross unrecognized tax benefits at beginning of year			$	27	$	35	$	30
Increases for:
	Tax positions related to the current year			16		4		3
	Tax positions related to prior years			24		8		3
Decreases for:
	Settlements			(2)		(14)		-
	Lapse of the applicable statute of limitations			(4)		(6)		(1)
Gross unrecognized tax benefits at end of year			$	61	$	27	$	35
Adjustments to reflect tax treaties and other arrangements				(7)		(8)		(6)
Net unrecognized tax benefits at end of year			$	54	$	19	$	29