Income Taxes (Tables)

12 Months Ended

Dec. 31, 2016

Summary of the Major Components of the Company's Income Tax Expense

The following is a summary of the major components of the Company’s income tax expense:



(in millions of Canadian dollars)	2016			2015		2014
Current income tax expense	$	233		$	373	$	208
Deferred income tax expense
Origination and reversal of temporary differences	336			105		317
Effect of tax rate increases	—			23		—
Effect of hedge of net investment in foreign subsidiaries	(20		)	100		42
Other	4			6		(5		)
Total deferred income tax expense	320			234		354
Total income taxes	$	553		$	607	$	562
Income before income tax expense
Canada	$	1,513		$	1,099	$	1,269
Foreign	639			860		769
Total income before income tax expense	$	2,152		$	1,959	$	2,038
Income tax expense
Current
Canada	$	165		$	173	$	50
Foreign	68			200		158
Total current income tax expense	233			373		208
Deferred
Canada	207			163		292
Foreign	113			71		62
Total deferred income tax expense	320			234		354
Total income taxes	$	553		$	607	$	562

Components of Deferred Income Tax Assets and Liabilities

The provision for deferred income taxes arises from temporary differences in the carrying values of assets and liabilities for financial statement and income tax purposes and the effect of loss carry forwards. The items comprising the deferred income tax assets and liabilities are as follows:



(in millions of Canadian dollars)	2016		2015
Deferred income tax assets
Amount related to tax losses carried forward	$	18	$	16
Liabilities carrying value in excess of tax basis	149		89
Future environmental remediation costs	30		33
Tax credits carried forward including minimum tax	—		—
Other	58		72
Total deferred income tax assets	255		210
Deferred income tax liabilities
Properties carrying value in excess of tax basis	3,796		3,553
Other	30		48
Total deferred income tax liabilities	3,826		3,601
Total net deferred income tax liabilities	$	3,571	$	3,391

Expected Income Tax Expense Reconciled To Income Tax Expense

The Company’s consolidated effective income tax rate differs from the expected Canadian statutory tax rates. Expected income tax expense at statutory rates is reconciled to income tax expense as follows:



(in millions of Canadian dollars, except percentage)	2016			2015			2014
Statutory federal and provincial income tax rate (Canada)	26.65		%	26.47		%	26.31		%
Expected income tax expense at Canadian enacted statutory tax rates	$	573		$	519		$	536
Increase (decrease) in taxes resulting from:
(Gains) losses not subject to tax	(23		)	28			(5		)
Canadian tax rate differentials	—			1			(1		)
Foreign tax rate differentials	—			39			36
Effect of tax rate increases	—			23			—
Other	3			(3		)	(4		)
Income tax expense	$	553		$	607		$	562

Reconciliation of Uncertain Tax Positions In Relation To Unrecognized Tax Benefits for Canada and the United States

The following table provides a reconciliation of uncertain tax positions in relation to unrecognized tax benefits for Canada and the United States for the year ended December 31, 2016:



(in millions of Canadian dollars)	2016			2015			2014
Unrecognized tax benefits at January 1	$	15		$	17		$	16
Increase in unrecognized:
Tax benefits related to the current year	—			4			2
Dispositions:
Gross uncertain tax benefits related to prior years	(2		)	(6		)	(1		)
Unrecognized tax benefits at December 31	$	13		$	15		$	17