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Income Taxes (Tables) | 12 Months Ended
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Dec. 31, 2019
8. Income Taxes |
Income tax provision |
The income tax provision, for the years ended December 31, differs from that computed using the enacted combined Canadian federal and Nova Scotia and New Brunswick provincial statutory income tax rate for the following reasons:
millions of Canadian dollars | 2019 | 2018
Income before provision for income taxes | $ | 771 | $ | 816
Statutory income tax rate |  | 31% |  | 31%
Income taxes, at statutory income tax rate |  | 239 |  | 253
Deferred income taxes on regulated income recorded as regulatory assets and regulatory liabilities |  | (66) |  | (59)
Foreign tax rate variance |  | (49) |  | (55)
Amortization of deferred income tax regulatory liabilities |  | (36) |  | (37)
Tax effect of equity earnings |  | (15) |  | (15)
GBPC impairment charge |  | 11 |  | -
Investment tax credits |  | (9) |  | (4)
Change in treatment of NMGC net operating loss carryforwards |  | (7) |  | -
Florida state tax apportionment adjustment |  | - |  | (23)
Change in prior year unrecognized tax benefits at NSPI |  | - |  | 7
Other |  | (7) |  | 2
Income tax expense | $ | 61 | $ | 69
Effective income tax rate |  | 8% |  | 8%
Composition of taxes on income from continuing operations |
millions of Canadian dollars | 2019 | 2018
Current income taxes |  |  |  |
Canada | $ | (19) | $ | 3
United States |  | (46) |  | (121)
Other |  | 1 |  | 2
Deferred income taxes |  |  |  |
Canada |  | 45 |  | 11
United States |  | 137 |  | 215
Other |  | - |  | (4)
Investment tax credits |  |  |  |
United States |  | (9) |  | (4)
Operating loss carryforwards |  |  |  |
Canada |  | (48) |  | (33)
Income tax expense (recovery) | $ | 61 | $ | 69
The following reflects the composition of income before provision for income taxes presented in the Consolidated Statements of Income for the years ended December 31:
millions of Canadian dollars | 2019 | 2018
Canada | $ | 98 | $ | 127
United States |  | 682 |  | 646
Other |  | (9) |  | 43
Income before provision for income taxes | $ | 771 | $ | 816
Composition of income before provision for income taxes |
The deferred income tax assets and liabilities presented in the Consolidated Balance Sheets as at December 31 consisted of the following:
millions of Canadian dollars | 2019 | 2018
Deferred income tax assets: |  |  |  |
Tax loss carryforwards | $ | 908 | $ | 917
Tax credit carryforwards |  | 311 |  | 269
Regulatory liabilities - cost of removal |  | 195 |  | 206
Derivative instruments |  | 145 |  | 90
Pension and post-retirement liabilities |  | 84 |  | 126
Other |  | 329 |  | 441
Total deferred income tax assets before valuation allowance |  | 1,972 |  | 2,049
Valuation allowance |  | (193) |  | (163)
Total deferred income tax assets after valuation allowance | $ | 1,779 | $ | 1,886
Deferred income tax (liabilities): |  |  |  |
Property, plant and equipment | $ | (2,382) | $ | (2,591)
Derivative instruments |  | (148) |  | (124)
Other |  | (348) |  | (316)
Total deferred income tax liabilities | $ | (2,878) | $ | (3,031)
Consolidated Balance Sheets presentation: |  |  |  |
Long-term deferred income tax assets | $ | 186 | $ | 175
Long-term deferred income tax liabilities |  | (1,285) |  | (1,320)
Net deferred income tax liabilities | $ | (1,099) | $ | (1,145)
Net operating loss ("NOL"), capital loss and tax credit carryforwards and their expiration periods |
Emera’s net operating loss (“NOL”), capital loss and tax credit carryforwards and their expiration periods as at December 31, 2019 consisted of the following:
| Gross Tax | Unrecognized | Net Tax | Expiration
millions of Canadian dollars | Carryforwards | Amounts | Carryforwards | Period
Canada |  |  |  |  |  |  |
NOL | $ | 1,131 | $ | (554) | $ | 577 | 2027-2039
Capital loss |  | 80 |  | (80) |  | - | Indefinite
United States |  |  |  |  |  |  |
Federal NOL | $ | 2,394 | $ | - | $ | 2,394 | 2024-2037
State NOL |  | 1,174 |  | - |  | 1,174 | 2024-2039
Tax credit |  | 311 |  | - |  | 311 | 2020-Indefinite
Other |  |  |  |  |  |  |
NOL | $ | 38 | $ | (38) | $ | - | 2020-2026
Details of the change in unrecognized tax benefits |
millions of Canadian dollars | 2019 | 2018
Balance, January 1 | $ | 26 | $ | 19
Increases due to tax positions related to current year |  | 2 |  | -
Increases due to tax positions related to a prior year |  | 1 |  | 8
Decreases due to tax positions related to a prior year |  | - |  | (1)
Balance, December 31 | $ | 29 | $ | 26

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