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Income Taxes | 6 Months Ended
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Jun. 30, 2017
Disclosure of income tax [Abstract] |
Income Taxes |
28. INCOME TAXES |  |
Components of Income Tax Expense
|  | 2018 |  |  | 2017 |
Current tax expense (recovery) |  |  |  |  |  |
Recognized in profit or loss in current year |  | $ | 59,056 |  |  | $ | 66,345 |
Adjustments recognized in the current year with respect to prior years |  | (5,155 | ) |  | (3,468 | )
|  | 53,901 |  |  | 62,877 |
Deferred tax expense (recovery) |  |  |  |  |  |
Deferred tax recovery recognized in the current year |  | (13,256 | ) |  | (898 | )
Adjustments recognized in the current year with respect to prior years |  | (1,098 | ) |  | (1,539 | )
Increase in deferred tax liabilities due to tax impact of reversals of mineral properties, plant, and equipment impairments (Note 11, 12) |  | — |  |  | 17,770 |
Recognition of previously unrecognized deferred tax assets |  | (6,140 | ) |  | (10,275 | )
Benefit from previously unrecognized losses, and other temporary differences |  | (3,600 | ) |  | (6,487 | )
Decrease in deferred tax liabilities due to tax impact of NRV charge to inventory |  | (8,660 | ) |  | (2,414 | )
|  | (32,754 | ) |  | (3,843 | )
Income tax expense |  | $ | 21,147 |  |  | $ | 59,034 |
Income tax expense differs from the amount that would result from applying the Canadian federal and provincial income tax rates to earnings before income taxes. These differences result from the items shown on the following table which results in an effective tax rate that varies considerably from the comparable period. The main factors that affected the effective tax rate for the year ended December 31, 2018 and the comparable period of 2017 were changes in the non-recognition of certain deferred tax assets, mining taxes paid, and withholding taxes on payments from foreign subsidiaries. The Company continues to expect that these and other factors will continue to cause volatility in effective tax rates in the future. Reconciliation of Effective Income Tax Rate
|  | 2018 |  |  | 2017 |
Earnings before taxes and non-controlling interest |  | $ | 33,188 |  |  | $ | 182,485 |
Statutory Canadian income tax rate |  | 27.00 | % |  | 26.00 | %
Income tax expense based on above rates |  | $ | 8,961 |  |  | $ | 47,446 |
Increase (decrease) due to: |  |  |  |
Non-deductible expenditures |  | 3,929 |  |  | 4,618 |
Foreign tax rate differences |  | (2,160 | ) |  | 3,644 |
Change in net deferred tax assets not recognized: |  |  |  |
- Argentina exploration expenditures |  | 3,372 |  |  | 2,051 |
- Other deferred tax assets |  | 1,168 |  |  | (10,752 | )
Non-taxable portion of net earnings of affiliates |  | (3,254 | ) |  | (4,055 | )
Tax on sale of royalty |  | — |  |  | 1,400 |
Effect of other taxes paid (mining and withholding) |  | 14,371 |  |  | 20,065 |
Effect of foreign exchange on tax expense |  | 1,611 |  |  | (3,928 | )
Non-taxable impact of foreign exchange |  | (351 | ) |  | 2,937 |
Change in current tax expense estimated for prior years |  | (5,030 | ) |  | (3,503 | )
Other |  | (1,470 | ) |  | (889 | )
Income tax expense |  | $ | 21,147 |  |  | $ | 59,034 |
Effective income tax rate |  | 63.72 | % |  | 32.35 | %
Deferred tax assets and liabilities The following is the analysis of the deferred tax assets (liabilities) presented in the consolidated financial statements:
|  | 2018 |  |  | 2017 |
Net deferred tax liability, beginning of year |  | $ | (168,549 | ) |  | $ | (169,136 | )
Recognized in net earnings in the year |  | 32,754 |  |  | 3,843 |
Reduction due to Mexican de-consolidation payments applied to current tax |  | (697 | ) |  | (3,231 | )
Other |  | (83 | ) |  | (25 | )
Net deferred liability, end of year |  | $ | (136,575 | ) |  | $ | (168,549 | )
Deferred tax assets |  | 12,244 |  |  | 2,679 |
Deferred tax liabilities |  | (148,819 | ) |  | (171,228 | )
Net deferred tax liability |  | $ | (136,575 | ) |  | $ | (168,549 | )
Components of deferred tax assets and liabilities The deferred tax assets (liabilities) are comprised of the various temporary differences as detailed below:
|  | 2018 |  |  | 2017 |
Deferred tax assets (liabilities) arising from: |  |  |  |  |  |
Closure and decommissioning costs |  | $ | 9,105 |  |  | $ | 7,019 |
Tax losses and mining tax credits |  | 29,195 |  |  | 24,014 |
Deductible Mexican mining taxes |  | 2,974 |  |  | 2,792 |
Tax credit resulting from Mexican de-consolidation |  | 698 |  |  | 1,385 |
Accounts payable and accrued liabilities |  | 6,726 |  |  | 3,047 |
Trade and other receivables |  | 15,756 |  |  | 21,527 |
Provision for doubtful debts and inventory adjustments |  | (11,752 | ) |  | (14,517 | )
Mineral properties, plant, and equipment |  | (169,703 | ) |  | (186,641 | )
Estimated sales provisions |  | (19,746 | ) |  | (28,726 | )
Other temporary differences and provisions |  | 172 |  |  | 1,551 |
Net deferred tax liability |  | $ | (136,575 | ) |  | $ | (168,549 | )
At December 31, 2018, the net deferred tax liability above included the deferred tax benefit of $29.2 million related to tax losses of approximately $98.4 million. These losses will begin to expire after the 2024 year end, if unused. At December 31, 2017, the net deferred tax liability above included the deferred tax benefit of $24.0 million related to tax losses of approximately $80.6 million. These losses will begin to expire after the 2024 year end, if unused. Unrecognized deductible temporary differences, unused tax losses and unused tax credits Deductible temporary differences, unused tax losses and unused tax credits for which no deferred tax assets have been recognized are attributable to the following:
|  | 2018 |  |  | 2017 |
Tax loss (revenue in nature) |  | $ | 131,179 |  |  | $ | 165,180 |
Net tax loss (capital in nature) |  | 14,456 |  |  | 15,423 |
Resource pools and other tax credits |  | 18,266 |  |  | 18,609 |
Financing fees |  | 785 |  |  | 1,464 |
Mineral properties, plant, and equipment |  | 22,669 |  |  | 20,441 |
Closure and decommissioning costs |  | 33,835 |  |  | 42,484 |
Exploration and other expenses not currently deductible |  | 51,175 |  |  | 54,672 |
Intercompany debt |  | 10,160 |  |  | 8,061 |
Doubtful debt and inventory |  | 24,840 |  |  | 16,602 |
Deductible Mexican mining taxes |  | — |  |  | 77 |
Payroll and vacation accruals |  | 827 |  |  | 2,015 |
Other temporary differences |  | 8,217 |  |  | 2,601 |
|  | $ | 316,409 |  |  | $ | 347,629 |
Included in the above amounts are operating losses, which if not utilized will expire as follows:
At December 31, 2018
|  | Canada |  | US |  | Peru |  | Mexico |  | Barbados |  | Argentina |  |  | Total |
2019 |  | — |  |  | 85 |  |  | — |  |  | — |  |  | 4 |  |  | 45 |  |  | 134 |
2020 |  | — |  |  | 80 |  |  | — |  |  | — |  |  | 7 |  |  | 61 |  |  | 148 |
2021 – and after |  | 114,466 |  |  | 13,469 |  |  | 250 |  |  | 2,456 |  |  | 105 |  |  | 151 |  |  | 130,897 |
Total tax losses |  | $ | 114,466 |  |  | $ | 13,634 |  |  | $ | 250 |  |  | $ | 2,456 |  |  | $ | 116 |  |  | $ | 257 |  |  | 131,179 |
At December 31, 2017 |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Canada |  | US |  | Peru |  | Mexico |  | Barbados |  | Argentina |  |  | Total |
2018 |  | — |  |  | 120 |  |  | — |  |  | — |  |  | 6 |  |  | 50 |  |  | 176 |
2019 |  | — |  |  | 86 |  |  | — |  |  | — |  |  | 4 |  |  | 90 |  |  | 180 |
2020 – and after |  | 122,853 |  |  | 13,289 |  |  | — |  |  | 20,925 |  |  | 93 |  |  | 7,664 |  |  | 164,824 |
Total tax losses |  | $ | 122,853 |  |  | $ | 13,495 |  |  | $ | — |  |  | $ | 20,925 |  |  | $ | 103 |  |  | $ | 7,804 |  |  | $ | 165,180 |
Taxable temporary differences associated with investment in subsidiaries As at December 31, 2018, taxable temporary differences of $85.2 million (2017 – $88.3 million) associated with the investments in subsidiaries have not been recognized as the Company is able to control the timing of the reversal of these differences and does not expect them to reverse in the foreseeable future.

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