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Income Taxes (Tables) | 12 Months Ended
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Dec. 31, 2020
10. 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 provincial statutory income tax rate for the following reasons:
millions of Canadian dollars | 2020 | 2019
Income before provision for income taxes | $ | 1,325 | $ | 771
Statutory income tax rate |  | 29.5% |  | 31%
Income taxes, at statutory income tax rate |  | 391 |  | 239
Additional impact from the sale of Emera Maine |  | 102 |  | -
Deferred income taxes on regulated income recorded as regulatory assets and regulatory liabilities |  | (48) |  | (66)
Foreign tax rate variance |  | (45) |  | (49)
Amortization of deferred income tax regulatory liabilities |  | (44) |  | (36)
Tax effect of equity earnings |  | (15) |  | (15)
Other |  | - |  | (12)
Income tax expense | $ | 341 | $ | 61
Effective income tax rate |  | 26% |  | 8%
Composition of taxes on income from continuing operations |
millions of Canadian dollars | 2020 | 2019
Current income taxes |  |  |  |
Canada | $ | 18 | $ | (19)
United States |  | (58) |  | (46)
Other |  | - |  | 1
Deferred income taxes |  |  |  |
Canada |  | 20 |  | 45
United States |  | 426 |  | 137
Other |  | (9) |  | -
Investment tax credits |  |  |  |
United States |  | (10) |  | (9)
Operating loss carryforwards |  |  |  |
Canada |  | (46) |  | (48)
Income tax expense | $ | 341 | $ | 61
The following table 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 | 2020 | 2019
Canada | $ | 176 | $ | 98
United States |  | 1,142 |  | 682
Other |  | 7 |  | (9)
Income before provision for income taxes | $ | 1,325 | $ | 771
Deferred income tax assets and liabilities |
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 | 2020 | 2019
Deferred income tax assets: |  |  |  |
Tax loss carryforwards | $ | 724 | $ | 908
Tax credit carryforwards |  | 319 |  | 311
Regulatory liabilities - cost of removal |  | 184 |  | 195
Derivative instruments |  | 108 |  | 145
Other |  | 375 |  | 413
Total deferred income tax assets before valuation allowance |  | 1,710 |  | 1,972
Valuation allowance |  | (202) |  | (193)
Total deferred income tax assets after valuation allowance | $ | 1,508 | $ | 1,779
Deferred income tax (liabilities): |  |  |  |
Property, plant and equipment | $ | (2,450) | $ | (2,382)
Derivative instruments |  | (93) |  | (148)
Other |  | (385) |  | (348)
Total deferred income tax liabilities | $ | (2,928) | $ | (2,878)
Consolidated Balance Sheets presentation: |  |  |  |
Long-term deferred income tax assets | $ | 209 | $ | 186
Long-term deferred income tax liabilities |  | (1,629) |  | (1,285)
Net deferred income tax liabilities | $ | (1,420) | $ | (1,099)
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, 2020 consisted of the following:
| Gross Tax | Unrecognized | Net Tax | Expiration
millions of Canadian dollars | Carryforwards | Amounts | Carryforwards | Period
Canada |  |  |  |  |  |  |
NOL | $ | 1,370 | $ | (619) | $ | 751 | 2027 - 2040
Capital loss |  | 61 |  | (61) |  | - | Indefinite
United States |  |  |  |  |  |  |
Federal NOL | $ | 1,412 | $ | - | $ | 1,412 | 2030 - 2040
State NOL |  | 563 |  | - |  | 563 | 2032 - 2040
Tax credit |  | 319 |  | - |  | 319 | 2025 - 2040
Other |  |  |  |  |  |  |
NOL | $ | 39 | $ | (39) | $ | - | 2021 - 2027
Details of the change in unrecognized tax benefits |
millions of Canadian dollars | 2020 | 2019
Balance, January 1 | $ | 29 | $ | 26
Increases due to tax positions related to current year |  | 1 |  | 2
Increases due to tax positions related to a prior year |  | 2 |  | 1
Decreases due to tax positions related to a prior year |  | (2) |  | -
Balance, December 31 | $ | 30 | $ | 29

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