Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

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)	2020		2019		2018
Current income tax expense	$	537	$	525	$	381
Deferred income tax expense
Origination and reversal of temporary differences	277		316		214
Effect of tax rate decrease	(32)		(95)		(21)
Effect of hedge of net investment in foreign subsidiaries	(18)		(38)		64
Other	(6)		(2)		(1)
Total deferred income tax expense	221		181		256
Total income taxes	$	758	$	706	$	637
Income before income tax expense
Canada	$	2,518	$	2,392	$	1,788
Foreign	684		754		800
Total income before income tax expense	$	3,202	$	3,146	$	2,588
Income tax expense
Current
Canada	$	412	$	410	$	336
Foreign	125		115		45
Total current income tax expense	537		525		381
Deferred
Canada	231		141		174
Foreign	(10)		40		82
Total deferred income tax expense	221		181		256
Total income taxes	$	758	$	706	$	637

Deferred Income Tax Assets and Liabilities

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

(in millions of Canadian dollars)	2020		2019
Deferred income tax assets
Amount related to tax losses carried forward	$	17	$	6
Liabilities carrying value in excess of tax basis	131		139
Unrealized foreign exchange losses	4		26
Environmental remediation costs	22		22
Other	4		4
Total net deferred income tax assets	178		197
Deferred income tax liabilities
Properties carrying value in excess of tax basis	3,708		3,524
Pensions carrying value in excess of tax basis	43		83
Other	93		91
Total deferred income tax liabilities	3,844		3,698
Total net deferred income tax liabilities	$	3,666	$	3,501

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)	2020			2019			2018
Statutory federal and provincial income tax rate (Canada)	26.31		%	26.77		%	26.86		%
Expected income tax expense at Canadian enacted statutory tax rates	$	842		$	842		$	695
(Decrease) increase in taxes resulting from:
(Gains) losses not subject to tax	(23)			(19)			8
Canadian tax rate differentials	(3)			—			—
Foreign tax rate differentials	(32)			(33)			(55)
Effect of tax rate decrease	(32)			(95)			(21)
Valuation allowance	—			(5)			5
Unrecognized tax benefits	(7)			33			—
Other	13			(17)			5
Income tax expense	$	758		$	706		$	637

Reconciliation of Uncertain Tax Positions In Relation To Unrecognized Tax Benefits

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)	2020		2019		2018
Unrecognized tax benefits at January 1	$	52	$	13	$	13
Increase in unrecognized:
Tax benefits related to the current year	—		9		1
Tax benefits related to prior years	10		34		—
Dispositions:
Gross uncertain tax benefits related to prior years	(9)		—		(1)
Settlements with taxing authorities	2		(4)		—
Unrecognized tax benefits at December 31	$	55	$	52	$	13