Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

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)	2019			2018			2017
Current income tax expense	$	525		$	381		$	303
Deferred income tax expense
Origination and reversal of temporary differences	316			214			371
Effect of tax rate decrease	(95		)	(21		)	(541		)
Effect of hedge of net investment in foreign subsidiaries	(38		)	64			(42		)
Other	(2		)	(1		)	2
Total deferred income tax expense (recovery)	181			256			(210		)
Total income taxes	$	706		$	637		$	93
Income before income tax expense
Canada	$	2,392		$	1,788		$	1,829
Foreign	754			800			669
Total income before income tax expense	$	3,146		$	2,588		$	2,498
Income tax expense
Current
Canada	$	410		$	336		$	257
Foreign	115			45			46
Total current income tax expense	525			381			303
Deferred
Canada	141			174			256
Foreign	40			82			(466		)
Total deferred income tax expense (recovery)	181			256			(210		)
Total income taxes	$	706		$	637		$	93

Deferred Income Tax Assets and Liabilities

The items comprising the deferred income tax assets and liabilities are as follows:



(in millions of Canadian dollars)	2019		2018
Deferred income tax assets
Amount related to tax losses carried forward	$	6	$	11
Liabilities carrying value in excess of tax basis	139		97
Unrealized foreign exchange losses	26		85
Environmental remediation costs	22		23
Other	4		2
Total deferred income tax assets	197		218
Valuation allowance	—		(5		)
Total net deferred income tax assets	197		213
Deferred income tax liabilities
Properties carrying value in excess of tax basis	3,524		3,496
Pensions carrying value in excess of tax basis	83		164
Other	91		71
Total deferred income tax liabilities	3,698		3,731
Total net deferred income tax liabilities	$	3,501	$	3,518

Expected Income Tax Expense Reconciled To Income Tax Expense

Expected income tax expense at statutory rates is reconciled to income tax expense as follows:



(in millions of Canadian dollars, except percentage)	2019			2018			2017
Statutory federal and provincial income tax rate (Canada)	26.77		%	26.86		%	26.56		%
Expected income tax expense at Canadian enacted statutory tax rates	$	842		$	695		$	663
(Decrease) increase in taxes resulting from:
(Gains) losses not subject to tax	(19		)	8			(27		)
Canadian tax rate differentials	—			—			1
Foreign tax rate differentials	(33		)	(55		)	(9		)
Effect of tax rate decrease	(95		)	(21		)	(541		)
Valuation allowance	(5		)	5			—
Unrecognized tax benefits⁽¹⁾	33			—			1
Other⁽¹⁾	(17		)	5			5
Income tax expense	$	706		$	637		$	93

Reconciliation of Uncertain Tax Positions In Relation To Unrecognized Tax Benefits for Canada and the U.S.

The following table provides a reconciliation of uncertain tax positions in relation to unrecognized tax benefits for Canada and the U.S. for the year ended December 31:



(in millions of Canadian dollars)	2019			2018			2017
Unrecognized tax benefits at January 1	$	13		$	13		$	13
Increase in unrecognized:
Tax benefits related to the current year	9			1			—
Tax benefits related to prior years	34			—			—
Dispositions:
Gross uncertain tax benefits related to prior years	—			(1		)	—
Settlements with taxing authorities	(4		)	—			—
Unrecognized tax benefits at December 31	$	52		$	13		$	13