Income taxes (Tables)

12 Months Ended

Dec. 31, 2024

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 (recovery):


For the year ended December 31 (in millions of Canadian dollars)	2024		2023		2022
Current income tax expense	$	1,031	$	909	$	492
Deferred income tax expense (recovery)
Reversal of outside basis deferred income tax (Note 10)	—		(7,832)		—
Origination and reversal of temporary differences	65		53		101
Effect of tax rate decrease	(70)		(72)		(25)
Effect of hedge of net investment in foreign subsidiaries and equity-method investees (Note 8)	36		(22)		59
Other	(3)		(12)		1
Total deferred income tax expense (recovery)	28		(7,885)		136
Total income tax expense (recovery)	$	1,059	$	(6,976)	$	628

Income (loss) before income tax expense (recovery)
Canada	2,426		2,359		2,236
Foreign	2,346		(5,412)		1,909
Total income (loss) before income tax expense (recovery)	4,772		(3,053)		4,145
Income tax expense (recovery)
Current
Canada	409		377		333
Foreign	622		532		159
Total current income tax expense	1,031		909		492
Deferred
Canada	206		238		177
Foreign	(178)		(8,123)		(41)
Total deferred income tax expense (recovery)	28		(7,885)		136
Total income tax expense (recovery)	$	1,059	$	(6,976)	$	628

Deferred Income Tax Assets and Liabilities

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


As at December 31 (in millions of Canadian dollars)	2024		2023
Deferred income tax assets
Tax losses and other attributes carried forward	$	298	$	173
Liabilities carrying value in excess of tax basis	300		276
Unrealized foreign exchange losses	57		18
Environmental remediation costs	50		50
Other	10		7


Total deferred income tax assets	715		524
Valuation allowance	(57)		(36)
Total net deferred income tax assets	$	658	$	488
Deferred income tax liabilities

Properties carrying value in excess of tax basis	10,155		9,481
Pensions carrying value in excess of tax basis	1,084		751

Intangibles carrying value in excess of tax basis	824		789
Investments carrying value in excess of tax basis	498		473
Other	71		46
Total deferred income tax liabilities	12,632		11,540
Total net deferred income tax liabilities	$	11,974	$	11,052

Expected Income Tax Expense Reconciled to Income Tax Expense

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


For the year ended December 31 (in millions of Canadian dollars, except percentage)	2024			2023			2022
Statutory federal and provincial income tax rate (Canada)	26.11		%	26.11		%	26.12		%
Expected income tax expense (recovery) at Canadian enacted statutory tax rates	$	1,246		$	(797)		$	1,083
(Decrease) increase in taxes resulting from:
Reversal of outside basis deferred income tax (Note 10)	—			(7,832)			—
Remeasurement loss of Kansas City Southern	—			1,873			—
(Gains) losses not subject to tax	(10)			10			(9)
Canadian tax rate differentials	(17)			(14)			(12)
Foreign tax rate differentials	(41)			(62)			(94)
Effect of tax rate decrease	(70)			(72)			(25)
Deduction for dividends taxed on outside basis	—			(68)			(270)
Unrecognized tax benefits	3			(10)			(24)
Inflation in Mexico	(33)			(31)			—
Valuation allowance	5			1			—
Other	(24)			26			(21)
Income tax expense (recovery)	$	1,059		$	(6,976)		$	628

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, the U.S., and Mexico for the years ended December 31:


(in millions of Canadian dollars)	2024		2023		2022
Unrecognized tax benefits at January 1	$	22	$	20	$	49
Increase in unrecognized:
Tax benefits related to the current year	1		2		1
Tax benefits related to prior years	14		10		—
Tax benefits acquired with KCS	—		2		—
Dispositions:
Gross uncertain tax benefits related to prior years	(1)		(6)		(30)
Settlements with taxing authorities	(7)		(6)		—
Unrecognized tax benefits at December 31	$	29	$	22	$	20