Air Canada 2012 Annual Report Download - page 120
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2012 Air Canada Annual Report
120
12. INCOME TAXES
Income Tax Expense
2012 2011
Current income tax recovery in respect of prior years $– $ (1)
Deferred income tax expense 1 –
Income tax expense (recovery) $1 $ (1)
The income tax expense (recovery) differs from the amount that would have resulted from applying the statutory income tax
rate to income before income tax expense as follows:
2012 2011
Income (loss) before income taxes $132 $ (250)
Statutory income tax rate based on combined federal and provincial rates 26.49% 28.05%
Income tax expense (recovery) based on statutory tax rates 35 (70)
Effects of:
Non-taxable portion of capital (gains) losses (4) 10
Non-deductible expenses 12 14
Tax rate changes on deferred income taxes (16) 11
Recognition of previously unrecognized deferred income tax assets (31) –
Unrecognized deferred income tax assets – 41
Adjustment in respect of current income tax of prior years – (1)
Other 5 (6)
Income tax expense (recovery) $1 $ (1)
The applicable statutory tax rate is 26.49% (2011 – 28.05%). The Corporation’s applicable tax rate is the Canadian combined
rates applicable in the jurisdictions in which the Corporation operates. The decrease is mainly due to the reduction of the
Federal income tax rate in 2012 from 16.5% to 15%.
During the year, as a result of the repeal of the previously scheduled reduction of the Ontario general corporate income tax
rate from 11.5% to 10%, the relevant deferred tax balances have been remeasured.
The income tax expense (recovery) relating to components of Other comprehensive income is as follows:
2012 2011
Net gain (loss) on employee benefit liabilities $197 $ (597)
Recognition of previously unrecognized deferred income tax assets (197) –
Unrecognized deferred income tax assets – 597
Income tax expense in Other comprehensive income $– $ –
Deferred Income Tax
Certain intangible assets with no tax cost and a carrying value of $184, have indefinite lives and accordingly, the associated
deferred income tax liability of $49 (2011 – $48) is not expected to reverse until the assets are disposed of, become impaired
or amortizable. In addition, the Corporation has other deferred income tax liabilities in the amount of $55, against which a
deferred income tax asset of similar amount has been recognized. The recognized net deferred income tax liability of $49 is
included in Other long-term liabilities.