Bank of Montreal 2014 Annual Report Download - page 158

Notes
Cash Flows
Cash payments we made during the year in connection with our employee future benefit plans are as follows:
(Canadian $ in millions) Pension benefit plans Other employee future benefit plans
2014 2013 2012 2014 2013 2012
Contributions to defined benefit plans 254 154 198 –––
Contributions to defined contribution plans 887–––
Benefits paid directly to pensioners 30 24 25 33 30 29
292 186 230 33 30 29
Our best estimate of the amounts we expect to contribute for the year ending October 31, 2015 is approximately $182 million to our pension benefit plans and $40 million to our other employee future
benefit plans.
Note 25: Income Taxes
We report our provision for income taxes in our Consolidated Statement
of Income based upon transactions recorded in our consolidated
financial statements regardless of when they are recognized for income
tax purposes, with the exception of repatriation of retained earnings
from our foreign subsidiaries, as noted below.
In addition, we record an income tax expense or benefit directly in
shareholders’ equity when the taxes relate to amounts recorded in
shareholders’ equity. For example, income tax expense (recovery) on
hedging gains (losses) related to our net investment in foreign
operations is recorded in our Consolidated Statement of Comprehensive
Income as part of net gain (loss) on translation of net foreign
operations.
Current tax is the amount of income tax recoverable (payable) in
respect of the taxable loss (profit) for a period.
Deferred income tax assets and liabilities are measured at the tax
rates expected to apply when temporary differences reverse. Changes in
deferred income tax assets and liabilities related to a change in tax rates
are recorded in income in the period the tax rate is substantively
enacted, except to the extent that the tax arises from a transaction or
event which is recognized either in other comprehensive income or
directly in equity.
Included in deferred income tax assets is $77 million related to
Canadian tax loss carryforwards that will expire in 2030 to 2034, $1,331
million related to U.S. tax loss carryforwards that will expire in various
amounts in U.S. taxation years from 2028 through 2033 and $10 million
related to U.K. tax loss carryforwards that are available for use
indefinitely against relevant profits generated in the U.K. On the
evidence available, including management projections of income, we
believe that there will be sufficient taxable income generated by our
business operations to support these deferred tax assets. The amount of
tax on temporary differences, unused tax losses and unused tax credits
for which no deferred tax asset is recognized in our Consolidated
Balance Sheet as at October 31, 2014 is $182 million. Deferred tax
assets have not been recognized in respect of these items because it is
not probable that realization of these assets will occur.
Income that we earn in foreign countries through our branches or
subsidiaries is generally subject to tax in those countries. We are also
subject to Canadian taxation on the income earned in our foreign
branches. Canada allows a credit for foreign taxes paid on this income.
Upon repatriation of retained earnings from certain foreign subsidiaries,
we would be required to pay tax on certain of these earnings. As
repatriation of such earnings is not planned in the foreseeable future,
we have not recorded the related deferred income tax liability.
The amount of temporary differences associated with investments
in subsidiaries, branches, associates and interests in joint ventures for
which deferred tax liabilities have not been recognized is $23 billion as
at October 31, 2014 ($20 billion in 2013).
Components of Deferred Income Tax Balances
(Canadian $ in millions)
Allowance
for credit losses
Employee
future benefits
Deferred
compensation
benefits
Other
comprehensive
income
Tax loss
carry-
forwards Other Total
Deferred Income Tax Assets (1)
As at October 31, 2012 1,097 296 310 (47) 1,477 474 3,607
Benefit (expense) to income statement (216) 46 30 – (35) (14) (189)
Benefit (expense) to equity – (13) – 16 – – 3
Translation and other 33 – 4 2 43 1 83
As at October 31, 2013 914 329 344 (29) 1,485 461 3,504
Acquisitions – 8 15 – 10 2 35
Benefit (expense) to income statement (252) 31 42 – (180) 49 (310)
Benefit (expense) to equity – 3 – (3) – – –
Translation and other 96 3 18 25 103 72 317
As at October 31, 2014 758 374 419 (7) 1,418 584 3,546
(Canadian $ in millions)
Premises and
equipment
Pension
benefits
Goodwill and
intangible assets Securities Other Total
Deferred Income Tax Liabilities (2)
As at October 31, 2012 (320) 78 (232) (148) (28) (650)
Acquisitions – – (2) – – (2)
Benefit (expense) to income statement 6 8 (35) 113 108 200
Expense to equity – (113) – – – (113)
Translation and other (6) (4) (6) – (3) (19)
As at October 31, 2013 (320) (31) (275) (35) 77 (584)
Acquisitions 5 – (90) – – (85)
Benefit (expense) to income statement (10) (35) 28 32 (62) (47)
Benefit to equity –60 –––60
Translation and other (24) 2 (30) 2 1 (49)
As at October 31, 2014 (349) (4) (367) (1) 16 (705)
(1) Deferred tax assets of $3,019 million and $3,027 million as at October 31, 2014 and 2013, respectively, are presented on the balance sheet net by legal jurisdiction.
(2) Deferred tax liabilities of $178 million and $107 million as at October 31, 2014 and 2013, respectively, are presented on the balance sheet net by legal jurisdiction.
Certain comparative figures have been restated as a result of the adoption of new accounting principles – see Note 1.
BMO Financial Group 197th Annual Report 2014 171