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INCOME TAXES | 12 Months Ended
--- | ---
Dec. 31, 2024
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES INCOME TAX RATE RECONCILIATION
Year ended December 31, | 2024 | 2023 | 2022
(millions of Canadian dollars) |  |  |
Earnings before income taxes | 7,299 | 7,879 | 4,542
Canadian federal statutory income tax rate | 15 | % | 15 | % | 15 | %
Expected federal taxes at statutory rate | 1,095 | 1,182 | 681
Increase/(decrease) resulting from: |  |  |
Provincial and state income taxes 1 | 183 | 411 | 108
Foreign and other statutory rate differentials 2 | 340 | 187 | 295
Effects of rate-regulated accounting 3.4 | (192) | (106) | (122)
Write-off of regulatory deferrals 3,5 | 4 | 115 | —
Part VI.1 tax, net of federal Part I deduction 3,6 | 73 | 66 | 76
US Minimum Tax | 148 | 100 | 107
Non-taxable portion of gain on sale of investmen t 3,7 | (147) | — | —
Valuation allowance 3 | (2) | (12) | 6
Accounting impairment of non-deductible goodwill 3,8 | 148 | — | 370
Noncontrolling interests 3,9 | (30) | 19 | 9
Investment and production tax credits | (23) | (47) | —
Other 3 | 71 | (94) | 74
Income tax expense | 1,668 | 1,821 | 1,604
Effective income tax rate | 22.9 | % | 23.1 | % | 35.3 | %
1 The change in provincial and state income taxes from 2023 to 2024 reflects the decrease in earnings from Canadian operations partially offset by an increase in earnings from US operations before considering the non-deductible goodwill impairment to the Gas Transmission segment. Refer to Note 13 - Long-Term Investments. 2 The change in foreign and other statutory rate differentials from 2023 to 2024 reflects the increase in earnings from US operations before considering the non-deductible goodwill impairment to the Gas Transmission segment. Refer to Note 13 - Long-Term Investments. 3 T he provincial and state tax component of these items is included in the Provincial and state income taxes above. 4 The amount in 2024 includes the effects of rate regulated accounting attributable to the Acquisitions. Refer to Note 8 - Acquisitions and Disposition. 5 The amount in 2023 includes the federal tax impact of the de-recognition of rate-regulated accounting for income tax relating to Southern Lights Canada and portions of the Canadian Mainline including Line 9 and L3R. Refer to Note 7 - Regulatory Matters. 6 Part VI.1 tax is a tax levied on preferred share dividends paid in Canada. 7 The amount in 2024 represents the federal component of the non-taxable portion of the gain on sales relating to Alliance Pipeline and Aux Sable. Refer to Note 13 - Long-Term Investments. 8 The amounts relates to the federal impact of the non-deductible goodwill impairment to the Gas Transmissions segment. Refer to Note 13 - Long-Term Investments and Note 15 - Goodwill. 9 The amount in 2023 and 2022 includes the federal tax impact of impairments to Chapman Ranch and Magic Valley attributable to non-controlling interests in those respective years. Refer to Note 11 - Property, Plant and Equipment. COMPONENTS OF PRETAX EARNINGS AND INCOME TAXES
Year ended December 31, | 2024 | 2023 | 2022
(millions of Canadian dollars) |  |  |
Earnings before income taxes |  |  |
Canada | 1,035 |  | 2,233 |  | 583 |
US | 5,231 |  | 4,620 |  | 2,865 |
Other | 1,033 |  | 1,026 |  | 1,094 |
| 7,299 |  | 7,879 |  | 4,542 |
Current income taxes |  |  |
Canada | 248 |  | 100 |  | 360 |
US | 578 |  | 191 |  | 201 |
Other | 123 |  | 110 |  | 86 |
| 949 |  | 401 |  | 647 |
Deferred income taxes |  |  |
Canada | (299) |  | 456 |  | (358) |
US | 1,013 |  | 974 |  | 1,309 |
Other | 5 |  | (10) |  | 6 |
| 719 |  | 1,420 |  | 957 |
Income tax expense | 1,668 |  | 1,821 |  | 1,604 |
COMPONENTS OF DEFERRED INCOME TAXES Deferred income tax assets and liabilities are recognized for the future tax consequences of differences between carrying amounts of assets and liabilities and their respective tax bases. Major components of deferred income tax assets and liabilities are as follows:
December 31, | 2024 | 2023
(millions of Canadian dollars) |  |
Deferred income tax liabilities |  |
Property, plant and equipment | (11,368) |  | (9,202) |
Investments | (9,043) |  | (7,765) |
Regulatory assets | (1,940) |  | (1,338) |
Other | (251) |  | (52) |
Total deferred income tax liabilities | (22,602) |  | (18,357) |
Deferred income tax assets |  |
Financial instruments | 740 |  | 271 |
Loss carryforwards | 1,272 |  | 1,745 |
Other | 2,088 |  | 1,798 |
Total deferred income tax assets | 4,100 |  | 3,814 |
Less valuation allowance | (298) |  | (147) |
Total deferred income tax assets, net | 3,802 |  | 3,667 |
Net deferred income tax liabilities, net | (18,800) |  | (14,690) |
Presented as follows: |  |
Total deferred income tax assets | 796 |  | 341 |
Total deferred income tax liabilities | (19,596) |  | (15,031) |
Net deferred income tax liabilities, net | (18,800) |  | (14,690) |
A valuation allowance has been established for certain loss and credit carryforwards, and outside basis temporary differences on investments that reduce deferred income tax assets to an amount that will more likely than not be realized. As at both December 31, 2024 and 2023, we recognized the benefit of unused tax loss carryforwards of $1.3 billion in Canada which expire in 2031 and beyond. As at December 31, 2024, and 2023, we recognized the benefit of unused tax loss carryforwards of $4.2 billion and $6.4 billion, respectively, in the US with no expiration. We have not provided for deferred income taxes on the difference between the carrying value of substantially all of our foreign subsidiaries and their corresponding tax basis as the earnings of those subsidiaries are intended to be permanently reinvested in their operations. As such, these investments are not anticipated to give rise to income taxes in the foreseeable future. The difference between the carrying values of the investments and their tax bases is largely a result of unremitted earnings and currency translation adjustments. The unremitted earnings and currency translation adjustment for which no deferred taxes have been recognized in respect of foreign subsidiaries were $9.5 billion and $6.6 billion for the periods ended December 31, 2024 and 2023, respectively. If such earnings are remitted, in the form of dividends or otherwise, we may be subject to income taxes and foreign withholding taxes. The determination of the amount of unrecognized deferred income tax liabilities applicable to such amounts is not practicable. Enbridge and certain of our subsidiaries are subject to taxation in Canada, the US and other foreign jurisdictions. The material jurisdictions in which we are subject to potential examinations include the US (Federal) and Canada (Federal, Alberta and Québec). We are open to examination by Canadian tax authorities for the 2017 to 2024 tax years and by US tax authorities for the 2021 to 2024 tax years. We are currently under examination for income tax matters in Canada for the 2018 to 2021 tax years. We are not currently under examination for income tax matters in any other material jurisdiction where we are subject to income tax. UNRECOGNIZED TAX BENEFITS
Year ended December 31, | 2024 | 2023
(millions of Canadian dollars) |  |
Unrecognized tax benefits at beginning of year | 45 |  | 55 |
Gross decreases for tax positions of prior year | (2) |  | (2) |
Change in translation of foreign currency | 4 |  | (1) |
Lapses of statute of limitations | (16) |  | (7) |
Unrecognized tax benefits at end of year | 31 |  | 45 |
The unrecognized tax benefits as at December 31, 2024, if recognized, would impact our effective income tax rate. We do not anticipate further adjustments to the unrecognized tax benefits during the next 12 months that would have a material impact on our consolidated financial statements. We recognize accrued interest and penalties related to unrecognized tax benefits as a component of income taxes. Interest and penalties included in income taxes for the years ended December 31, 2024 and 2023 were $8 million recovery and $1 million expense, respectively. As at December 31, 2024 and 2023, interest and penalties of $6 million and $14 million, respectively, have been accrued.

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