Income taxes (Tables)

12 Months Ended

Dec. 31, 2021

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)	2021		2020		2019
Current income tax expense	$	526	$	537	$	525
Deferred income tax expense
Origination and reversal of temporary differences	259		277		316
Effect of tax rate decrease	(11)		(32)		(95)
Effect of hedge of net investment in foreign subsidiaries	(3)		(18)		(38)
Other	(3)		(6)		(2)
Total deferred income tax expense	242		221		181
Total income taxes	$	768	$	758	$	706
Income before income tax expense
Canada	$	2,899	$	2,518	$	2,392
Foreign	721		684		754
Total income before income tax expense	$	3,620	$	3,202	$	3,146
Income tax expense
Current
Canada	$	404	$	412	$	410
Foreign	122		125		115
Total current income tax expense	526		537		525
Deferred
Canada	(179)		231		141
Foreign	421		(10)		40
Total deferred income tax expense	242		221		181
Total income taxes	$	768	$	758	$	706

Deferred Income Tax Assets and Liabilities

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

(in millions of Canadian dollars)	2021		2020
Deferred income tax assets
Amount related to tax losses carried forward	$	17	$	17
Liabilities carrying value in excess of tax basis	124		131
Unrealized foreign exchange losses	—		4
Environmental remediation costs	22		22
Other	7		4
Total net deferred income tax assets	170		178
Deferred income tax liabilities
Investment in Kansas City Southern (Note 11)	7,079		—
Properties carrying value in excess of tax basis	3,887		3,708
Pensions carrying value in excess of tax basis	441		43
Unrealized foreign exchange gains	13		—
Other	102		93
Total deferred income tax liabilities	11,522		3,844
Total net deferred income tax liabilities	$	11,352	$	3,666

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)	2021			2020			2019
Statutory federal and provincial income tax rate (Canada)	26.12		%	26.31		%	26.77		%
Expected income tax expense at Canadian enacted statutory tax rates	$	946		$	842		$	842
(Decrease) increase in taxes resulting from:
Gains not subject to tax	(116)			(23)			(19)
Canadian tax rate differentials	(22)			(3)			—
Foreign tax rate differentials	(37)			(32)			(33)
Effect of tax rate decrease	(11)			(32)			(95)
Valuation allowance	—			—			(5)
Unrecognized tax benefits	(2)			(7)			33
Other	10			13			(17)
Income tax expense	$	768		$	758		$	706

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)	2021		2020		2019
Unrecognized tax benefits at January 1	$	55	$	52	$	13
Increase in unrecognized:
Tax benefits related to the current year	—		—		9
Tax benefits related to prior years	—		10		34
Dispositions:
Gross uncertain tax benefits related to prior years	(6)		(9)		—
Settlements with taxing authorities	—		2		(4)
Unrecognized tax benefits at December 31	$	49	$	55	$	52