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Income taxes | 12 Months Ended
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Dec. 31, 2019
Income taxes |
Income taxes | Note 18 - Income taxes Income tax expense for the periods ended December 31, 2019 and 2018 was as follows:
|  |  | 2019 |  |  | 2018 |
Current income tax expense |  |  |  |  |  |  |  |  |
Expense for the year |  |  | $ | 42.3 |  |  | $ | 34.1 |
Adjustment in respect of prior years |  |  |  | (3.2) |  |  |  | 6.0 |
Current income tax expense |  |  | $ | 39.1 |  |  | $ | 40.1 |
Deferred income tax expense (recovery) |  |  |  |  |  |  |  |  |
Origination and reversal of temporary differences in the current year |  |  |  | 20.2 |  |  |  | (7.7) |
U.S. Tax Reform impact |  |  |  | — |  |  |  | 2.0 |
Impact of changes in tax rate |  |  |  | (1.0) |  |  |  | 2.9 |
Change in unrecognized deductible temporary differences |  |  |  | (0.1) |  |  |  | 19.0 |
Adjustments in respect of prior years |  |  |  | 3.4 |  |  |  | (6.2) |
Other |  |  |  | 0.2 |  |  |  | — |
Deferred income tax expense |  |  |  | 22.7 |  |  |  | 10.0 |
|  |  | $ | 61.8 |  |  | $ | 50.1 |
A reconciliation of the provision for income taxes computed at the combined Canadian federal and provincial statutory rate to the provision for income taxes as shown in the consolidated statement of income and comprehensive income for the years ended December 31, 2019 and 2018, is as follows:
|  |  | 2019 |  |  | 2018 |
Net income before income taxes |  |  | $ | 405.9 |  |  | $ | 189.1 |
Statutory tax rate |  |  |  | 26.6% |  |  |  | 26.6% |
Tax expense at statutory rate |  |  | $ | 108.0 |  |  | $ | 50.4 |
Reconciling items: |  |  |  |  |  |  |  |  |
Change in unrecognized deductible temporary differences |  |  |  | (0.1) |  |  |  | 19.0 |
Income/expenses not taxed |  |  |  | (4.3) |  |  |  | (1.0) |
Differences in foreign statutory tax rates |  |  |  | (42.8) |  |  |  | (24.7) |
Differences due to changing future tax rates |  |  |  | (1.0) |  |  |  | 2.9 |
U.S. Tax Reform impact |  |  |  | — |  |  |  | 2.0 |
Foreign withholding tax |  |  |  | 0.3 |  |  |  | 0.6 |
Temporary differences subject to initial recognition exemption |  |  |  | 1.5 |  |  |  | 1.0 |
Other |  |  |  | 0.2 |  |  |  | (0.1) |
Net income tax expense |  |  | $ | 61.8 |  |  | $ | 50.1 |
Income tax expense (recovery) recognized in other comprehensive income is as follows:
|  |  |  | 2019 |  |  |  | 2018 |
|  |  |  |  |  |  |  |  |  |  |  | After |  |  |  |  |  |  |  |  |  |  |  | After |
|  |  |  | Before |  |  |  | Tax |  |  |  | Tax |  |  |  | Before |  |  |  | Tax |  |  |  | Tax |
|  |  |  | Tax Gain |  |  |  | (Expense) |  |  |  | Gain |  |  |  | Tax (Loss) |  |  |  | Recovery |  |  |  | (Loss) |
Gain (loss) on change in the fair value of equity investments at FVTOCI |  |  | $ | 11.4 |  |  | $ | (1.5) |  |  | $ | 9.9 |  |  | $ | (21.4) |  |  | $ | 3.0 |  |  | $ | (18.4) |
Cumulative translation adjustment |  |  |  | 32.3 |  |  |  | — |  |  |  | 32.3 |  |  |  | (68.3) |  |  |  | — |  |  |  | (68.3) |
Other comprehensive income (loss) |  |  | $ | 43.7 |  |  | $ | (1.5) |  |  | $ | 42.2 |  |  | $ | (89.7) |  |  | $ | 3.0 |  |  | $ | (86.7) |
Deferred tax |  |  | $ | — |  |  | $ | (1.5) |  |  | $ | — |  |  | $ | — |  |  | $ | 3.0 |  |  | $ | — |
The significant components of deferred income tax assets and liabilities as at December 31, 2019 and 2018, respectively, are as follows:
|  |  | 2019 |  |  | 2018 |
Deferred income tax assets: |  |  |  |  |  |  |  |  |
Deductible temporary differences relating to: |  |  |  |  |  |  |  |  |
Royalty, stream and working interests |  |  | $ | 6.5 |  |  | $ | 16.2 |
Non-capital loss carry-forwards |  |  |  | 0.3 |  |  |  | 1.9 |
Other |  |  |  | — |  |  |  | (0.8) |
|  |  | $ | 6.8 |  |  | $ | 17.3 |
Deferred income tax liabilities: |  |  |  |  |  |  |  |  |
Taxable temporary differences relating to: |  |  |  |  |  |  |  |  |
Share issue and debt issue costs |  |  | $ | (1.7) |  |  | $ | (3.7) |
Royalty, stream and working interests |  |  |  | 89.0 |  |  |  | 74.8 |
Non-capital loss carry-forwards |  |  |  | (4.3) |  |  |  | (2.6) |
Investments |  |  |  | 4.3 |  |  |  | 2.5 |
Other |  |  |  | (4.9) |  |  |  | (3.7) |
|  |  | $ | 82.4 |  |  | $ | 67.3 |
Deferred income tax liabilities, net |  |  | $ | 75.6 |  |  | $ | 50.0 |
The movement in net deferred taxes during the years ended December 31, 2019 and 2018 is as follows:
|  |  |  | 2019 |  |  |  | 2018 |
Balance, beginning of year |  |  | $ | 50.0 |  |  | $ | 45.8 |
Recognized in profit/loss |  |  |  | 22.5 |  |  |  | 10.0 |
Recognized in other comprehensive income (loss) |  |  |  | 1.5 |  |  |  | (3.0) |
Recognized in equity |  |  |  | 0.4 |  |  |  | — |
Other |  |  |  | 1.2 |  |  |  | (2.8) |
Deferred income tax liabilities, net |  |  | $ | 75.6 |  |  | $ | 50.0 |
The following table summarizes the Company’s non-capital losses at December 31, 2019 that can be applied against future taxable profit:
Country |  | Type |  | Amount |  | Expiry Date |
Canada |  | Non-Capital Losses |  | $ | 16.3 |  | 2029-2038 |
Chile |  | Non-Capital Losses |  |  | 1.0 |  | No expiry |
|  |  |  | $ | 17.3 |  |  |
Unrecognized deferred tax assets and liabilities The aggregate amount of taxable temporary differences associated with investments in subsidiaries, for which deferred tax liabilities have not been recognized as at December 31, 2019 is $393.7 million (2018 – $347.7 million). No deferred tax liabilities are recognized on the temporary differences associated with investment in subsidiaries because the company controls the timing of reversal and it is not probable that they will reverse in the foreseeable future. The aggregate amount of deductible temporary differences associated with other items, for which deferred tax assets have not been recognized as at December 31, 2019 is $72.7 million (2018 - $75.7 million). No deferred tax asset is recognized in respect of these items because it is not probable that future taxable profits will be available against which the company can utilize the benefit. Deductible temporary differences and unused tax credits for which no deferred tax assets have been recognized are attributable to the following:
|  |  | 2019 |  |  |  | 2018 |
Royalty, stream and working interests |  |  | $ | 48.0 |  |  | $ | 50.9 |
Tax losses (expiry dates - 2029-2038) |  |  |  | 24.7 |  |  |  | 24.8 |
|  |  | $ | 72.7 |  |  | $ | 75.7 |
The Company is undergoing an audit by the Canada Revenue Agency of its 2012-2015 taxation years, as referenced in Note 23.

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