Cogeco 2010 Annual Report Download - page 58

Consolidated Financial Statements COGECO CABLE INC. 2010 57
The following table provides the reconciliation between income taxes at the Canadian statutory federal and provincial income tax rates and the
consolidated income tax expense:
2010 2009
(in thousands of dollars) $ $
(restated)
Income (loss) before income taxes 186,321 (201,428)
Combined income tax rate 31.51% 32.55%
Income taxes at combined income tax rate 58,710 (65,565)
A
djustments for losses or income subject to lower or higher tax rates (9,828) (1,110)
Decrease in future income taxes as a result of decrease in substantively enacted tax rates (29,782) –
Decrease in income tax recovery arising from the non-deductible impairment of goodwill – 89,890
Utilization of pre-acquisition tax losses 4,432 6,142
Income taxes arising from non-deductible expenses 781 622
Effect of foreign income tax rate differences 6,117 25,366
Other (1,412) 1,455
Income taxes at effective income tax rate 29,018 56,800
The following table shows future income taxes resulting from temporary differences between the carrying amounts of assets and liabilities for
accounting purposes and the amounts used for tax purposes, as well as tax loss carryforwards:
2010 2009
(in thousands of dollars) $ $
(restated)
Fixed assets (87,399) (84,251)
Deferred charges (6,409) (7,165)
Intangible assets (130,558) (144,823)
Deferred and prepaid revenue 5,659 6,630
Share issuance costs 858 1,755
Partnership income (78,258) –
Non-capital loss and other tax credit carryforwards 2,833 983
Other 1,988 767
Net future income tax liabilities (291,286) (226,104)
Financial statement presentation
Current future income tax assets 6,133 4,275
Long-term future income tax assets 15,822 1,436
Current future income tax liabilities (78,267) –
Long-term future income tax liabilities (234,974) (231,815)
Net future income tax liabilities (291,286) (226,104)
As at August 31, 2010, the Corporation and it’s Canadian subsidiaries had accumulated federal and provincial income tax losses amounting to
approximately $9,442,000, the benefits of which have been recognized in these financial statements. These losses expire as follows:
2027 2030
(in thousands of dollars) $ $
2,675 6,767
The Corporation’s subsidiary, Cabovisão, also has income tax losses amounting to approximately €84,949,000 ($114,809,000), the benefits of
which have not been recognized in these financial statements. These losses may be used to reduce future years’ taxable income. In
accordance with the Portuguese Companies Income Tax Code (“CIRC”), tax losses incurred in a financial year can be carried forward and
deducted from taxable profits of one or more of the following six taxation years for tax losses incurred before 2010 and for the following four
taxation years for tax losses incurred in 2010 and beyond. However, the CIRC provides for certain exceptions whereby the general rule stated
above ceases to apply. One such exception is that tax losses cannot be deducted if the ownership of at least 50% of the social capital changes
from the moment when the tax losses were generated, unless a request is filed before such change in the ownership takes place, subject to
approval by the Portuguese tax authorities. To this effect, a request for preservation of tax losses for the years preceding the 2006 taxation
year was filed by Cabovisão on July 28, 2006 and approved by the Portuguese tax authorities on November 25, 2009. As part of their review,
the Portuguese tax authorities have audited Cabovisão’s tax returns for the 2003, 2004 and 2005 taxation years, which have resulted in notices