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Income Taxes | 12 Months Ended
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Dec. 31, 2017
INCOME TAXES. |
INCOME TAXES | 13. INCOME TAXES Income Tax Expense (Recovery)
($ millions) |  | 2017 |  | 2016 |  |
Current: |  |  |  |  |  |
| Current year |  | 1 150 |  | 222 |  |
| Adjustments to current income tax of prior years |  | 59 |  | (69 | ) |
Deferred: |  |  |  |  |  |
| Origination of temporary differences |  | 425 |  | (313 | ) |
| Adjustments in respect of deferred income tax of prior years |  | (70 | ) | 67 |  |
| Changes in tax rates and legislation |  | (106 | ) | (190 | ) |
| Recognition of previously unrecognized deferred tax assets |  | — |  | (76 | ) |
|  | 1 458 |  | (359 | ) |
Reconciliation of Effective Tax Rate The provision for income taxes reflects an effective tax rate that differs from the statutory tax rate. A reconciliation of the difference is as follows:
($ millions) |  | 2017 |  | 2016 |  |
Earnings before income tax |  | 5 916 |  | 86 |  |
Canadian statutory tax rate |  | 27.01% |  | 27.00% |  |
Statutory tax |  | 1 598 |  | 23 |  |
Add (deduct) the tax effect of: |  |  |  |  |  |
| Non-taxable component of capital gains |  | (90 | ) | (60 | ) |
| Share-based compensation and other permanent items |  | (1 | ) | 19 |  |
| Assessments and adjustments |  | (11 | ) | (2 | ) |
| Impact of income tax rate and legislative changes |  | (106 | ) | (190 | ) |
| Foreign tax rate differential |  | 180 |  | (28 | ) |
| Non-taxable component of dispositions |  | (41 | ) | — |  |
| Tax gains for which no deferred income tax asset was recognized |  | (51 | ) | (50 | ) |
| Recognition of deferred income tax asset previously unrecognized |  | — |  | (76 | ) |
| Other |  | (20 | ) | 5 |  |
|  | 1 458 |  | (359 | ) |
Deferred Income Tax Balances Deferred income tax expense (recovery) and net liabilities in the company's consolidated financial statements were comprised of the following:
|  | Net Earnings (Loss) |  | Consolidated Balance Sheets(1) |  |
($ millions) |  | 2017 |  | 2016 |  | Dec 31 2017 |  | Dec 31 2016 |  |
Property, plant and equipment |  | 157 |  | (864 | ) | 14 252 |  | 13 864 |  |
Decommissioning and restoration provision |  | 19 |  | 342 |  | (1 910 | ) | (1 701 | ) |
Employee retirement benefit plans |  | (5 | ) | (23 | ) | (639 | ) | (648 | ) |
Tax loss carry-forwards |  | — |  | (10 | ) | (109 | ) | (109 | ) |
Partnership deferral reserve |  | — |  | (78 | ) | — |  | — |  |
Foreign exchange and other |  | 78 |  | 121 |  | (161 | ) | (226 | ) |
|  | 249 |  | (512 | ) | 11 433 |  | 11 180 |  |
(1) | The current and non-current portion of the deferred income tax liability and asset are as follows:
($ millions) |  | Dec 31 2017 |  | Dec 31 2016 |  |
Deferred income tax liability expected to reverse within 12 months |  | 93 |  | 195 |  |
Deferred income tax asset expected to reverse within 12 months |  | (27 | ) | (21 | ) |
Deferred income tax liability expected to reverse after 12 months |  | 11 440 |  | 11 048 |  |
Deferred income tax asset expected to reverse after 12 months |  | (73 | ) | (42 | ) |
Net deferred income tax liability |  | 11 433 |  | 11 180 |  |
Change in Deferred Income Tax Balances
($ millions) |  | 2017 |  | 2016 |  |
Beginning of year |  | 11 180 |  | 9 919 |  |
Recognized in deferred income tax expense |  | 249 |  | (512 | ) |
Recognized in other comprehensive income |  | 19 |  | (5 | ) |
Recognized in equity |  | — |  | (26 | ) |
Acquisition |  | — |  | 2 054 |  |
Foreign exchange, disposition and other |  | (15 | ) | (179 | ) |
Reclassified to assets held for sale (notes 36 and 37) |  | — |  | (71 | ) |
End of year |  | 11 433 |  | 11 180 |  |
Deferred Tax in Shareholders' Equity
|  | Year ended December 31
($ millions) |  | 2017 |  | 2016 |
Deferred Tax in Other Comprehensive (Loss) Income |  |  |  |  |
| Actuarial (gain) loss on employment retirement benefit plans |  | (19 | ) | 5 |
Deferred Tax in Equity |  |  |  |  |
| Common share issuance |  | — |  | 26 |
|  | (19 | ) | 31 |
Deferred income tax assets are recognized for tax loss carry-forwards to the extent that the realization of the related tax benefit through future tax profits is probable. Suncor has not recognized a $75 million (2016 – $125 million) deferred tax asset on $556 million (2016 – $926 million) of capital losses on foreign exchange on U.S. dollar denominated debt which can only be utilized against future capital gains. No deferred tax liability has been recognized at December 31, 2017, on temporary differences of approximately $9.6 billion (2016 – $9.9 billion) associated with earnings retained in our investments in foreign subsidiaries, as the company is able to control the timing of the reversal of these differences. Based on current plans, repatriation of funds in excess of foreign reinvestment will not result in material additional income tax expense. Deferred distribution taxes associated with international business operations have not been recorded. In the fourth quarter of 2017, the U.S. government enacted a decrease in the federal corporate tax rate from 35% to 21% effective January 1, 2018. As a result, the company revalued its deferred income tax balances, resulting in a deferred income tax recovery of $124 million. In the fourth quarter of 2017, the Government of British Columbia enacted an increase to the provincial corporate income tax rate from 11% to 12%. As a result, the company revalued its deferred income tax balances, resulting in a deferred income tax expense of $18 million. In the fourth quarter of 2016, the Government of Quebec enacted a decrease in the corporate income tax rate from 11.9% to 11.5% evenly over the next four years, effective January 1, 2017. As a result, the company revalued its deferred income tax balances, resulting in a deferred income tax recovery of $10 million. In the third quarter of 2016, the U.K. government enacted a decrease in the supplementary charge rate on oil and gas profits in the North Sea that reduced the statutory tax rate on Suncor's earnings in the U.K. from 50% to 40%. The company revalued its deferred income tax balances, resulting in a deferred income tax recovery of $180 million.

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