Westjet 2015 Annual Report Download - page 84

Notes to Consolidated Financial Statements
As at and for the years ended December 31, 2015 and 2014
(Stated in thousands of Canadian dollars, except percentage, ratio, share and per share amounts)
WestJet Annual Report 2015 | 82
9. Long-term debt (continued)
On January 5, 2016, the Corporation entered into an unsecured, non-revolving $300,000 4-year term credit facility with a
syndicate of banks. The credit facility is available for general corporate purposes, including the funding of future aircraft
acquisitions. Funds from the credit facility can be drawn by way of Canadian dollar prime loans or Canadian dollar bankers’
acceptances. Interest is calculated by reference to the applicable base rate plus an applicable pricing margin based on the
Corporation’s debt rating. On January 7, 2016, the Corporation received the $300,000 funds flow from the term facility using
Canadian dollar bankers’ acceptances. The credit facility contains two financial covenants: (i) minimum pooled asset coverage
ratio of 1.5 to 1, and (ii) minimum fixed charge coverage ratio of 1.25 to 1. The Corporation has fixed the interest rate over the
4-year term of the facility at 2.757% using an interest rate swap.
10. Income taxes
(a) Reconciliation of total income tax expense
The effective rate on the Corporation’s earnings before income tax differs from the expected amount that would arise using the
combined Canadian federal and provincial statutory income tax rates. A reconciliation of the difference is as follows:
2015
2014
Earnings before income tax
520,258
390,307
Combined Canadian federal and provincial income tax rate
26.44%
25.96%
Expected income tax provision
137,556
101,324
Add (deduct):
Non-deductible expenses
4,611
3,931
Non-deductible share-based payment expense
859
1,985
Effect of tax rate changes
9,671
-
Other
31
(890)
Actual income tax provision
152,728
106,350
Effective tax rate
29.36%
27.25%
The increase in the effective tax rate is due to an increase to the general corporate income tax rate in Alberta to 12% from 10%
effective July 1, 2015. The tax rate increase became substantively enacted under IFRS on June 18, 2015.
(b) Deferred tax
Components of the net deferred tax liability are as follows:
2015
2014
Deferred tax liability:
Property and equipment
(269,880)
(251,444)
Deferred partnership income
(56,139)
(45,785)
Net unrealized gain on derivatives designated in a hedging relationship
(1,009)
−
Deferred tax asset:
Net unrealized loss on derivatives designated in a hedging relationship
−
337
(327,028)
(296,892)