v3.19.3.a.u2

Income tax expense | 12 Months Ended
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Dec. 31, 2019
Income tax expense |
Income tax expense | 16. Income tax expense The following table summarizes the current and deferred portions of the net income tax expense (benefit) by jurisdiction:
|  | Year Ended December 31, |
|  | 2019 |  | 2018 |  | 2017 |
Current income tax expense |  | $ | 4.9 |  | $ | 3.8 |  | $ | 4.1 |
Deferred income tax expense (benefit) |  |  | 4.9 |  |  | (3.6) |  |  | (62.2) |
Total income tax expense (benefit), net |  | $ | 9.8 |  | $ | 0.2 |  | $ | (58.1) |
The following is a reconciliation of the income taxes calculated at the Canadian enacted statutory rate of 27% for the years ended December 31, 2019, 2018 and 2017, respectively, to the provision for income taxes in the consolidated statements of operations:
|  | Year Ended December 31, |
|  | 2019 |  | 2018 |  | 2017 |
Computed income tax (benefit) expense at Canadian statutory rate |  |  | (9.2) |  |  | 10.1 |  |  | (39.3) |
Increases (decreases) resulting from: |  |  |  |  |  |  |  |  |  |
Operating in countries with different income tax rates |  |  | 0.1 |  |  | 0.1 |  |  | (20.1) |
|  |  | (9.1) |  |  | 10.2 |  |  | (59.4) |
Change in valuation allowance |  |  | 5.7 |  |  | (6.7) |  |  | (34.6) |
|  |  | (3.4) |  |  | 3.5 |  |  | (94.0) |
Dividend withholding tax and other cash taxes |  |  | 1.3 |  |  | 0.5 |  |  | 0.2 |
Foreign exchange |  |  | 1.7 |  |  | — |  |  | (2.4) |
Changes in tax rates |  |  | 2.2 |  |  | (3.3) |  |  | (1.5) |
Remeasurement of deferred tax assets and liabilities |  |  | — |  |  | — |  |  | 28.5 |
Capital gain (loss) on intercompany notes |  |  | 0.1 |  |  | (1.1) |  |  | (0.1) |
Impairments |  |  | 7.7 |  |  | — |  |  | 9.9 |
Other |  |  | 0.2 |  |  | 0.6 |  |  | 1.3 |
|  |  | 13.2 |  |  | (3.3) |  |  | 35.9 |
Income tax expense (benefit) |  | $ | 9.8 |  | $ | 0.2 |  | $ | (58.1) |
The tax effect of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2019 and 2018 are presented below:
|  | 2019 |  | 2018 |
Deferred tax assets: |  |  |  |  |  |  |
Loss carryforwards |  | $ | 135.9 |  | $ | 163.3 |
Capital loss carryforwards |  |  | 35.8 |  |  | 34.4 |
Interest expense limitation carryforwards |  |  | 9.7 |  |  | 10.9 |
Finance and share issuance costs |  |  | 0.1 |  |  | 0.5 |
Tax Credits |  |  | 1.4 |  |  | 1.4 |
Stock-based compensation |  |  | 2.4 |  |  | 2.9 |
Derivative contracts |  |  | 5.7 |  |  | 3.2 |
Other long-term notes |  |  | — |  |  | 1.5 |
Other |  |  | 0.9 |  |  | — |
Total deferred tax assets |  |  | 191.9 |  |  | 218.1 |
Less: Valuation allowance |  |  | (145.4) |  |  | (139.7) |
|  |  | 46.5 |  |  | 78.4 |
Deferred tax liabilities: |  |  |  |  |  |  |
Intangible assets |  |  | (21.9) |  |  | (30.0) |
Property, plant and equipment |  |  | (31.2) |  |  | (41.9) |
Basis difference in joint ventures |  |  | (5.4) |  |  | (15.5) |
Other long-term investments |  |  | (1.3) |  |  | — |
Total deferred tax liabilities |  |  | (59.8) |  |  | (87.4) |
Net deferred tax liability |  |  | (13.3) |  |  | (9.0) |
Net deferred tax (liability) asset by jurisdiction |  | 2019 |  | 2018 |
U.S. Federal and State |  | $ | (23.7) |  | $ | (16.0) |
Canada |  |  | 10.4 |  |  | 7.0 |
Net deferred tax liability |  |  | (13.3) |  |  | (9.0) |
Income tax expense for the year ended December 31, 2019 was $9.8 million. Expected income tax benefit for the same period, based on the Canadian enacted statutory rate of 27%, was $9.2 million. The primary items impacting the tax rate for the year ended December 31, 2019 were $7.7 million related to impairments and a net increase to our valuation allowances of $5.7 million, consisting of $7.9 million increases in Canada and $2.2 million decreases in the United States. In addition, the rate was further impacted by $2.2 million related to changes in tax rates, $1.7 million relating to foreign exchange, $1.3 million relating to withholding and state taxes and $0.4 million of other permanent differences. Income tax expense for the year ended December 31, 2018 was $0.2 million. Expected income tax expense for the same period, based on the Canadian enacted statutory rate of 27%, was $10.1 million. The primary items impacting the tax rate for the twelve months ended December 31, 2018 were $0.5 million relating to withholding and state taxes and $0.7 million of other permanent differences. These items were offset by a net decrease to our valuation allowance of $6.7 million, consisting of $0.1 million of decreases in Canada due to utilization of net operating losses and $6.6 million decreases in the United States. Based on initiatives recently completed, we determined that sufficient deferred tax liabilities were likely to reverse in a timely manner against certain deferred tax assets, resulting in a reduction of the valuation allowance in the United States. In addition, the rate was further impacted by $3.3 million relating to changes in tax rates and $1.1 million related to capital loss on intercompany notes. During the preparation of our 2019 consolidated financial statements, we identified an immaterial error in our previously issued financial statements relating to the presentation of deferred taxes in accordance with ASC 740 - Income Taxes. Under this guidance, entities are prohibited from offsetting deferred tax liabilities from one jurisdiction against deferred tax assets of another jurisdiction. At December 31, 2018, we recorded deferred tax assets in Canada of $7.0 million and deferred tax liabilities of $16.0 million in the U.S. Prior to the correction, we presented a net deferred tax liability of $9.0 million. The prior period balance sheet has been revised to correct this error. This reclassification did not impact the consolidated statement of operations or consolidated statement of cash flows. Valuation allowances are reserves that have been recorded to offset some or all of its deferred tax assets. The amount of the allowances recorded have been based on that portion of the tax assets for which evidence suggests it is more likely than not that a tax benefit will not be realized. As of December 31, 2019, we have recorded a valuation allowance of $145.4 million. This amount is comprised primarily of provisions against available Canadian and U.S. net operating loss carryforwards. In assessing the recoverability of our deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax asset will be realized. The ultimate realization of the deferred tax assets is dependent upon projected future taxable income in the United States and in Canada and available tax planning strategies. As of December 31, 2019, we had the following net operating loss carryforwards that are scheduled to expire in the following years:
|  | U.S. |  | Canada |  | Total |
2029 |  | $ | - |  | $ | 27.3 |  | $ | 27.3 |
2030 |  |  | 41.1 |  |  | - |  |  | 41.1 |
2031 |  |  | 25.8 |  |  | - |  |  | 25.8 |
2032 |  |  | 13.4 |  |  | 5.8 |  |  | 19.2 |
2033 |  |  | 20.6 |  |  | 23.5 |  |  | 44.1 |
2034 |  |  | 122.3 |  |  | 9.1 |  |  | 131.4 |
2035 |  |  | 154.1 |  |  | - |  |  | 154.1 |
2036 |  |  | 17.0 |  |  | 20.3 |  |  | 37.3 |
2037 |  |  | 16.7 |  |  | 8.9 |  |  | 25.6 |
2038 |  |  | - |  |  | 10.1 |  |  | 10.1 |
2039 |  |  | - |  |  | 6.9 |  |  | 6.9 |
|  | $ | 411.0 |  | $ | 111.9 |  | $ | 522.9 |

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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