INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2014

Schedule of income tax rate reconciliation


Year ended December 31,	2014		2013		2012
(millions of Canadian dollars)
Earnings before income taxes and discontinued operations	2,173		613		1,186
Canadian federal statutory income tax rate	15%		15%		15%
Expected federal taxes at statutory rate	326		92		178
Increase/(decrease) resulting from:
Provincial and state income taxes	(36	)	(1	)	97
Foreign and other statutory rate differentials1	394		45		(69	)
Effects of rate-regulated accounting5	(97	)	(55	)	(38	)
Foreign allowable interest deductions5	(65	)	(39	)	(24	)
Part VI.1 tax, net of federal Part I deduction2,5	47		23		19
Intercompany sale of investment3.5	68		-		33
Noncontrolling interests5	(28	)	26		(32	)
Other4,5	2		32		7
Income taxes on earnings before discontinued operations	611		123		171
Effective income tax rate	28.1%		20.1%		14.4%

The higher effective income tax rate for 2014 reflected the increase in earnings in the Company’s United States operations and the higher United States federal statutory rate over the Canadian federal statutory rate.

Represents Part VI.1 tax on preference share dividend distributions, net of an allowed federal deduction. For 2013, this tax was presented net of an $11 million federal tax recovery related to changes to tax law enacted during the year.

In November 2014 and December 2012, Enbridge sold certain assets to the Fund. As these transactions occurred between entities under common control of the Company, the intercompany gains realized on these transfers were eliminated. However, because these transactions involved the sale of shares and partnership units, tax consequences have been recognized in earnings. This resulted in a tax expense of $157 million and $56 million in 2014 and 2012, respectively.

Other for 2013 includes $55 million related to the federal component of the tax effect of adjustments related to prior periods.

The provincial or state tax component of these items is included in the “Provincial and state income taxes” above.

Schedule of components of pretax earnings and income taxes

Year ended December 31,	2014		2013		2012
(millions of Canadian dollars)
Earnings before income taxes and discontinued operations
Canada	114		193		1,037
United States	1,614		132		(58	)
Other	445		288		207
	2,173		613		1,186
Current income taxes
Canada	35		(30	)	130
United States	(15	)	18		35
Other	4		4		3
	24		(8	)	168
Deferred income taxes
Canada	(193	)	31		160
United States	780		100		(157	)
	587		131		3
Income taxes on earnings before discontinued operations	611		123		171

Schedule of major components of deferred income tax assets and liabilities

December 31,	2014		2013
(millions of Canadian dollars)
Deferred income tax liabilities
Property, plant and equipment	(2,668	)	(1,984	)
Investments	(2,469	)	(1,226	)
Regulatory assets	(240	)	(248	)
Other	(102	)	(115	)
Total deferred income tax liabilities	(5,479	)	(3,573	)
Deferred income tax assets
Financial instruments	644		487
Pension and OPEB plans	203		128
Loss carryforwards	390		129
Other	246		68
Total deferred income tax assets	1,483		812
Less valuation allowance	(42	)	(28	)
Total deferred income tax assets, net	1,441		784
Net deferred income tax liabilities	(4,038	)	(2,789	)
Presented as follows:
Assets
Accounts receivable and other (Note 7)	245		120
Deferred income taxes	561		16
Total deferred income tax assets	806		136
Liabilities
Accounts payable and other	(2	)	-
Deferred income taxes	(4,842	)	(2,925	)
Total deferred income tax liabilities	(4,844	)	(2,925	)
Net deferred income tax liabilities	(4,038	)	(2,789	)

Schedule of unrecognized tax benefits

Year ended December 31,	2014		2013
(millions of Canadian dollars)
Unrecognized tax benefits at beginning of year	46		54
Gross increases for tax positions of current year	5		10
Gross decreases for tax positions of prior years	-		(14	)
Reduction for lapse of statute of limitations	(5	)	(4	)
Change in translation of foreign currency	5		-
Unrecognized tax benefits at end of year	51		46