Income Taxes (Tables)

12 Months Ended

Dec. 31, 2016

[a]	The provision for income taxes differs from the expense that would be obtained by applying the Canadian statutory income tax rate as a result of the following:


	2016			2015

Canadian statutory income tax rate		26.5	%		26.5	%
Manufacturing and processing profits deduction		(0.3	)		(0.4	)
Foreign rate differentials		(0.2	)		0.8
Losses not benefited		0.8			1.1
Utilization of losses previously not benefited		(0.2	)		(0.1	)
Earnings of equity accounted investees		(1.2	)		(0.8	)
Tax on repatriation of foreign earnings		0.7			2.1
Valuation allowance on deferred tax assets [i]		(0.4	)		—
Write off of investment [ii]		—			(1.4	)
Research and development tax credits		(1.5	)		(1.3	)
Reserve for uncertain tax positions		0.2			(0.3	)
Non-deductible foreign exchange losses [iii]		1.3			1.0
Others		(0.3	)		(0.4	)

Effective income tax rate		25.4	%		26.8	%

[i]

GAAP requires that the Company assess whether valuation allowances should be established or maintained against its deferred tax assets, based on consideration of all available evidence, using a “more-likely-than-not” standard. The factors the Company uses to assess the likelihood of realization are its history of losses, forecasts of future pre-tax income and tax planning strategies that could be implemented to realize the deferred tax assets.

[ii]	During 2015, the Company recorded a benefit related to the write-off of historical tax basis in one of its South American subsidiaries.

[iii]

Non-deductible foreign exchange losses are related to the re-measurement of financial statement balances of foreign subsidiaries, primarily in Mexico, that are maintained in a currency other than their functional currency.

Details of Income before Income Taxes by Jurisdiction

[b]	The details of income before income taxes by jurisdiction are as follows:


	2016		2015

Canadian	$	617	$	590
Foreign		2,163		2,061

	$	2,780	$	2,651

Details of Income Tax Provision

[c]	The details of the income tax provision are as follows:


	2016		2015

Current
Canadian	$	127	$	140
Foreign		559		578

		686		718


Deferred
Canadian		16		14
Foreign		4		(21	)

		20		(7	)

	$	706	$	711

Summary of Deferred Income Taxes Provided on Temporary Differences

[d]	Deferred income taxes have been provided on temporary differences, which consist of the following:


	2016			2015

Tax depreciation greater than book depreciation	$	58		$	12
Book amortization (in excess of) less than tax amortization		(41	)		7
Liabilities currently not deductible for tax		48			—
Net tax losses benefited		(31	)		(13	)
Change in valuation allowance on deferred tax assets		(12	)		(1	)
Tax on undistributed foreign earnings		8			3
Others		(10	)		(15	)

	$	20		$	(7	)

Summary of Deferred Tax Assets and Liabilities

[e]	Deferred tax assets and liabilities consist of the following temporary differences:


	2016			2015

Assets
Tax benefit of loss carryforwards	$	715		$	614
Liabilities currently not deductible for tax		106			211
Tax credit carryforwards		22			24
Unrealized loss on cash flow hedges and retirement liabilities		134			154
Other assets tax value in excess of book values		36			11
Others		21			5

		1,034			1,019
Valuation allowance against tax benefit of loss carryforwards		(615	)		(562	)
Other valuation allowance		(66	)		(50	)

		353			407


Liabilities
Tax depreciation in excess of book depreciation		277			249
Tax on undistributed foreign earnings		98			10
Unrealized gain on cash flow hedges and retirement liabilities		3			9

		378			268


Net deferred tax (liabilities) assets	$	(25	)	$	139

Net Deferred Tax (Liabilities) Assets Presented on Consolidated Balance Sheet

The net deferred tax (liabilities) assets are presented on the consolidated balance sheet in the following categories:


	2016			2015

Long-term deferred tax assets	$	268		$	271
Long-term deferred tax liabilities		(293	)		(132	)

	$	(25	)	$	139

Summary of Changes in Gross Unrecognized Tax Benefits

[i]

As at December 31, 2016 and 2015, the Company’s gross unrecognized tax benefits were $220 and $221 million, respectively [excluding interest and penalties], of which $201 and $158 million, respectively, if recognized, would affect the Company’s effective tax rate. The gross unrecognized tax benefits differ from the amount that would affect the Company’s effective tax rate due primarily to the impact of the valuation allowance on deferred tax assets. A summary of the changes in gross unrecognized tax benefits is as follows:


	2016			2015

Balance, beginning of year	$	221		$	202
Increase based on tax positions related to current year		21			17
(Decrease) increase based on tax positions of prior years		(52	)		53
Increase related to acquisitions		44			—
Settlements		(2	)		(15	)
Statute expirations		(8	)		(20	)
Foreign currency translation		(4	)		(16	)

	$	220		$	221