Air Canada 2009 Annual Report Download - page 110

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2009 Air Canada Annual Report
110
7. FUTURE INCOME TAXES
The following income tax related amounts appear in the Corporation’s Consolidated Statement of Financial Position:
2009 2008
Liability
Tax payable (a) $ (10) $ (10)
Future income tax liability (c) (85) (88)
$ (95) $ (98)
(a) Taxes Payable
During 2007, Air Canada recorded a current income tax expense of $10 resulting from the Federal and Ontario harmonization
of corporate taxes. Air Canada will have a cash tax payable of $10 that will be payable over a fi ve year period beginning
in 2010. The estimated amount payable in 2010 of $4 is included in Accounts payable and accrued liabilities and the
remainder is recorded in Other long-term liabilities.
(b) Valuation Allowance
The Corporation has determined that it is more likely than not that future income tax assets of $1,043 are not recoverable
and have been offset by a valuation allowance. However, the future tax deductions underlying the future tax assets remain
available for use in the future to reduce taxable income. The benefi t of future income tax assets that existed at fresh start,
and for which a valuation allowance is recorded, is recognized fi rst to reduce to nil any remaining intangible assets (on a
pro-rata basis) that were recorded upon fresh start reporting with any remaining amount as a credit to Shareholders’ equity.
The benefi t of future income tax assets that arise after fresh start are recognized in the Consolidated Statement of Operations.
(c) Future Income Tax Liability
It has been assumed that certain intangibles and other assets with nominal tax cost and a carrying value of approximately
$658, have indefi nite lives and accordingly, the associated future income tax liability is not expected to reverse until the
assets are disposed of or become amortizable, resulting in the reporting of a future income tax liability of $85.
The future income tax assets and liabilities are as follows:
2009 2008
Future tax assets
Loss carry forwards $ 689 $ 588
Post-employment obligations 322 466
Accounting provisions not currently deductible for tax 144 261
Deferred gains 24 40
Other 91 95
Total future tax assets 1,270 1,450
Future tax liabilities
Book basis of capital over tax basis 153 217
Intangible assets 120 126
Other 39 38
Total future tax liabilities 312 381
Net future tax assets 958 1,069
Less valuation allowance (b) 1,043 1,157
Net recorded future income tax liability $ (85) $ (88)