Telus 2011 Annual Report Download - page 136

132 . TELUS 2011 ANNUAL REPORT
(b) Temporary differences
The Company must make significant estimates in respect of the compo-
sition of its deferred income tax liability. The operations of the Company
are complex and the related tax interpretations, regulations and legislation
are continually changing. As a result, there are usually some tax matters
in question.
Temporary differences comprising the net deferred income tax liability and the amounts of deferred income tax expense recognized in the statements
of income and other comprehensive income for each temporary difference are estimated as follows:
Recognized in
Other Business
December 31, comprehensive acquisitions December 31,
(millions) 2010 Net income income and other 2011
(adjusted –
Note 25(d))
Property, plant and equipment and intangible assets subject to amortization $ 326 $ß 68 $ – $ – $ 394
Intangible assets with indefinite lives 1,092 19 – 2 1,113
Partnership income unallocated for income tax purposes 398 23 – – 421
Net pension and share-based compensation amounts (23) 65 (288) – (246)
Reserves not currently deductible (92) 6 – – (86)
Losses available to be carried forward(1) (36) 1 – – (35)
Other 18 23 2 (4) 39
Net deferred income tax liability $ß1,683 $ß205 $ß(286) $ß(2) $ß1,600
(1) The Company expects to be able to utilize its non-capital losses prior to expiry.
Recognized in
Other Business
January 1, comprehensive acquisitions December 31,
(millions) 2010 Net income income and other 2010
(Note 25(d)) (adjusted –
Note 25(d))
Property, plant and equipment and intangible assets subject to amortization $ 251 $ß 75 $ – $ – $ 326
Intangible assets with indefinite lives 1,047 45 – – 1,092
Partnership income unallocated for income tax purposes 437 (39) – – 398
Net pension and share-based compensation amounts (52) 99 (70) – (23)
Reserves not currently deductible (141) 49 – – (92)
Losses available to be carried forward(1) (41) 5 – – (36)
Other 21 (17) 17 (3) 18
Net deferred income tax liability $ß1,522 $ß217 $ß(53) $ß(3) $ß1,683
(1) The Company expects to be able to utilize its non-capital losses prior to expiry.
IFRS-IASB requires the separate disclosure of temporary differences
arising from the carrying value of the investment in subsidiaries and
partnerships exceeding their tax base and for which no deferred income
tax liabilities have been recognized. In the Company’s specific instance
this is relevant to its investment in Canadian subsidiaries and Canadian
partnerships. The Company is not required to recognize such deferred
income tax liabilities as it is in a position to control the timing and
manner of the reversal of the temporary differences, which would not
be expected to be exigible to income tax, and it is probable that such
differences will not reverse in the foreseeable future. Although the
Company is in a position to control the timing and reversal of temporary
differences in respect of its non-Canadian subsidiaries, and it is not
probable that such differences will reverse in the foreseeable future,
it does recognize all potential taxes for repatriation of substantially
all unremitted earnings in non-Canadian subsidiaries.
(c) Other
The Company has net capital losses and such losses may only be applied
against realized taxable capital gains. The Company expects to include a
net capital loss carry-forward of $5 million (December 31, 2010 – $5 million;
January 1, 2010 – $605 million) in its Canadian income tax returns.
During the year ended December 31, 2011, the Company recog nized
the benefit of $NIL (2010 – $1 million) in net capital losses.
The Company conducts research and development activities, which
are eligible to earn Investment Tax Credits. During the year ended
December 31, 2011, the Company recorded Investment Tax Credits of
$8 million (2010 – $20 million). Of the Investment Tax Credits recorded
by the Company during the year ended December 31, 2011, $6 million
(2010 – $15 million) was recorded as a reduction of capital and the
balance was recorded as a reduction of Goods and services purchased.