Corporate income taxes

recorded

in the Bank’s consolidated financial statements for the years ended October 31 are as follows:

(a)	Components of income tax provision


For the year ended October 31 ($ millions)	2021			2020			2019
Provision for income taxes in the Consolidated Statement of Income:

Current income taxes:
Domestic:
Federal	$	1,105		$	635		$	525
Provincial		824			529			444
Adjustments related to prior periods		(27	)		(29	)		5
Foreign		726			1,053			1,215
Adjustments related to prior periods		(24	)		24			(48	)
		2,604			2,212			2,141
Deferred income taxes:
Domestic:
Federal		32			(159	)		174
Provincial		8			(97	)		103
Foreign		227			(413	)		54
		267			(669	)		331
Total provision for income taxes in the Consolidated Statement of Income	$	2,871		$	1,543		$	2,472
Provision for income taxes in the Consolidated Statement of Changes in Equity:
Current income taxes	$	435		$	149		$	(108	)
Deferred income taxes		(100	)		(212	)		60
		335			(63	)		(48	)
Reported in:
Other Comprehensive Income		341			(63	)		(33	)
Retained earnings		(6	)		–			(18	)
Other reserves		–			–			3
Total provision for income taxes in the Consolidated Statement of Changes in Equity		335			(63	)		(48	)
Total provision for income taxes	$	3,206		$	1,480		$	2,424
Provision for income taxes in the Consolidated Statement of Income includes:
Deferred tax expense (benefit) relating to origination/reversal of temporary differences	$	269		$	(672	)	$	329
Deferred tax expense (benefit) of tax rate changes		(2	)		3			2
	$	267		$	(669	)	$	331

(b)	Reconciliation to statutory rate

Income taxes in the Consolidated Statement of Income vary from the amounts that would be computed by applying the composite federal and provincial statutory income tax rate for the following reasons:


	2021						2020						2019
For the year ended October 31 ($ millions)	Amount			Percent of pre-tax income			Amount			Percent of pre-tax income			Amount			Percent of pre-tax income
Income taxes at Canadian statutory rate	$	3,364			26.2	%	$	2,209			26.3	%	$	2,983			26.5	%
Increase (decrease) in income taxes resulting from:
Lower average tax rate applicable to subsidiaries and foreign branches		(245	)		(1.9	)		(489	)		(5.8	)		(300	)		(2.7	)
Tax-exempt income from securities		(236	)		(1.8	)		(207	)		(2.4	)		(221	)		(2.0	)
Deferred income tax effect of substantively enacted tax rate changes		(2	)		–			3			–			2			–
Other, net		(10	)		(0.1	)		27			0.3			8			0.1
Total income taxes and effective tax rate	$	2,871			22.4	%	$	1,543			18.4	%	$	2,472			21.9	%

(c)	Deferred taxes

Significant components of the Bank’s deferred tax assets and liabilities are as follows:


	Statement of Income						Statement of Financial Position
	For the year ended						As at
October 31 ($ millions)	2021			2020			2021		2020
Deferred tax assets:
Loss carryforwards	$	52		$	60		$	174	$	226
Allowance for credit losses		405			(718	)		922		1,380
Deferred compensation		(77	)		44			241		164
Deferred income		88			112			254		352
Property and equipment		(106	)		(35	)		364		368
Pension and other post-retirement benefits		(28	)		(52	)		522		980
Securities		(21	)		(26	)		323		187
Lease liabilities		59			49			875		827
Cash flow hedges		–			–			49		–
Other		(119	)		(78	)		663		650
Total deferred tax assets	$	253		$	(644	)	$	4,387	$	5,134
Deferred tax liabilities:
Cash flow hedges	$	–		$	–		$	34	$	360
Deferred compensation		(16	)		(25	)		131		121
Deferred income		(8	)		(15	)		14		15
Property and equipment		94			158			808		849
Pension and other post-retirement benefits		(9	)		(7	)		97		90
Securities		14			(40	)		179		201
Investment in subsidiaries and associates		(40	)		82			122		98
Intangible assets		53			(1	)		1,774		1,837
Other		(102	)		(127	)		326		451
Total deferred tax liabilities	$	(14	)	$	25		$	3,485	$	4,022
Net deferred tax assets (liabilities) (1)	$	267		$	(669	)	$	902	$	1,112

(1)

For Consolidated Statement of Financial Position presentation, deferred tax assets and liabilities are assessed by legal entity. As a result, the net deferred tax assets of $902

(2020 – $1,112) are represented by deferred tax assets of $2,051 (2020 – $2,185), and deferred tax liabilities of $1,149 (2020 – $1,073) on the Consolidated Statement of Financial Position.

The major changes to net deferred taxes were as follows:


For the year ended October 31 ($ millions)	2021			2020
Balance at beginning of year	$	1,112		$	263
Deferred tax benefit (expense) for the year recorded in income		(267	)		669
Deferred tax benefit (expense) for the year recorded in equity		100			212
Disposed in divestitures		–			9
Other		(43	)		(41	)
Balance at end of year	$	902		$	1,112

The tax related to temporary differences, unused tax losses and unused tax credits for which no deferred tax asset is recognized in the Consolidated Statement of Financial Position amounts to $24 million (October 31, 2020 – $15 million). The amount related to unrecognized losses is $24 million, which will expire as follows: $23 million between 2023 and 2031 and $1 million has no expiry.

Included in the net deferred tax asset are tax benefits of $164 million (2020 – $177 million) that have been recognized in certain Canadian and foreign subsidiaries that have incurred losses in either the current or the preceding year. In determining if it is appropriate to recognize these tax benefits, the Bank relied on projections of future taxable

profits.

The amount

of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures for which deferred tax liabilities have not been recognized at October 31, 2021 is approximately $34 billion (2020 – $35 billion).

Canadian Tax Matters

Since 2016, the Bank has received reassessments totaling $1,025 million of tax and interest as a result of the Canada Revenue Agency denying the tax deductibility of certain Canadian dividends received during the 2011-2015 taxation years. In June 2021, the Bank received a reassessment for $176 million of tax and interest in respect of certain Canadian dividends received during the 2016 taxation year. The circumstances of the dividends subject to these reassessments are similar to those prospectively addressed by rules introduced in 2015 and 2018.

A subsidiary of the Bank has received withholding tax assessments from the CRA in respect of certain of its securities lending transactions for its 2014 and 2015 taxation years totaling $173 million of tax, penalties and interest. Proposed assessments totaling $300 million have also been received in respect of similar securities lending transactions in 2016 and 2017.

In respect of both matters the Bank is confident that its tax filing position was appropriate and in accordance with the relevant provisions of the Income Tax Act (Canada) and intends to vigorously defend its position.