TD Bank 2005 Annual Report Download - page 26

TD BANK FINANCIAL GROUP ANNUAL REPORT 2005 Management’s Discussion and Analysis
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TAXES
Total income and other taxes were up $42 million from 2004.
Current income tax expense before amortization of intangibles
was down $61 million, reflecting a 6.4% decrease from 2004.
Other taxes were up $103 million from the prior year mainly due
to an increase in payroll taxes, capital taxes and sales taxes by
$44 million, $28 million and $32 million respectively.
The Bank’s effective income tax rate, on a reported basis,
was 22.8% for fiscal 2005, compared with 26.4% in fiscal
2004. Based on earnings before amortization of intangibles, the
effective income tax rate was 24.7% for fiscal 2005, compared
with 26.0% in fiscal 2004. The effective income tax rate on the
reported basis is set out in Note 16 of the Bank’s Consolidated
Financial Statements.
The Bank has entered into certain agreements with
Ameritrade. These agreements called for reorganization of
the corporate entities prior to completion of the transaction.
This reorganization was largely completed in the fourth quarter,
with related tax costs of $138 million. Other corporate restruc-
turing added $25 million.
The Government of Canada has the practice of announcing
proposed legislation and enacting it only years, in some cases,
many years later. However such enactment is often retroactive
to the original announcement date although the form of the
legislation may have greatly altered over the time period.
Neither Canadian nor U.S. GAAP allows for any provision of
the estimated impact of such proposals, even where they have
a high likelihood of passage.
Currently, there is a very large amount of proposed legislation
which would affect the Bank. Because of its complexity
and uncertainty it is not possible to estimate a total impact.
Generally, however, the Bank believes that the net impact will
be favourable.
(millions of Canadian dollars) 2005 vs 2004
2005 2004 2003 2002 2001 % change
Salaries and employee benefits
Salaries $ 2,544 $2,254 $2,304 $2,273 $2,225 12.9%
Incentive compensation 1,139 1,084 986 875 1,150 5.1
Pension and other employee benefits 535 442 468 418 333 21.0
Salaries and employee benefits total 4,218 3,780 3,758 3,566 3,708 11.6
Occupancy
Rent 373 353 361 330 323 5.7
Depreciation 147 134 143 148 149 9.7
Property tax 17 14 15 18 19 21.4
Other 139 111 137 109 101 25.2
Occupancy total 676 612 656 605 592 10.5
Equipment
Rent 192 165 185 170 159 16.4
Depreciation 175 160 175 164 169 9.4
Other 242 237 290 327 328 2.1
Equipment total 609 562 650 661 656 8.4
Goodwill impairment1/amortization – –624 – 198 –
Amortization of intangible assets 546 626 772 998 1,292 (12.8)
Restructuring costs 43 (7) 92 – 239 714.3
Marketing and business development 469 384 348 388 410 22.1
Brokerage related fees 226 228 229 224 229 (.9)
Professional and advisory services 494 446 372 366 322 10.8
Communications 205 207 208 225 205 (1.0)
Other
Capital and business taxes 167 141 133 107 106 18.4
Postage 108 100 91 96 115 8.0
Travel and relocation 78 62 58 68 67 25.8
Other 943 866 373 448 515 8.9
Other total 1,296 1,169 655 719 803 10.9
Total expenses $8,782 $8,007 $8,364 $7,752 $8,654 9.7%
Efficiency ratio – reported basis 73.8%75.1% 84.8% 77.0% 81.1% (130)bps
Efficiency ratio – beforeamortization of intangibles 69.2 69.377.067.169.0 (10)
1Amount represents goodwill impairment in 2003 and
goodwill amortization in 2001.
NON-INTEREST EXPENSES AND EFFICIENCY RATIO
TABLE 9