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Income Taxes | 12 Months Ended
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Dec. 31, 2023
Income Tax Disclosure [Abstract] |
Income Taxes |
12. | INCOME TAXES
[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:
|  | 2023 |  |  | 2022 |
Canadian statutory income tax rate |  |  | 26.5 | % |  |  | 26.5 | %
Tax on repatriation of foreign earnings |  |  | 3.6 |  |  |  | 5.3 |
Net effect of losses not benefited |  |  | 1.2 |  |  |  | 7.7 |
Non-taxable capital losses (gains) |  |  | 1.2 |  |  |  | (0.3 | )
Reserve for uncertain tax positions |  |  | 0.6 |  |  |  | 0.4 |
Earnings of equity accounted investees |  |  | (1.4 | ) |  |  | (1.6 | )
Foreign exchange re-measurement |  |  | (1.7 | ) |  |  | (0.6 | )
Deductible inflationary adjustments |  |  | (1.7 | ) |  |  | (3.3 | )
Valuation allowance on deferred tax assets |  |  | (3.0 | ) |  |  | (2.2 | )
Foreign rate differentials |  |  | (3.2 | ) |  |  | 0.6 |
Research and development tax credits |  |  | (4.1 | ) |  |  | (7.1 | )
Others |  |  | 1.9 |  |  |  | 1.6 |
Effective income tax rate |  |  | 19.9 | % |  |  | 27.0 | %
[b] | The details of income (loss) before income taxes by jurisdiction are as follows:
|  | 2023 |  |  | 2022 |
Canadian |  | $ | (184 | ) |  | $ | (57 | )
Foreign |  |  | 1,790 |  |  |  | 935 |
|  | $ | 1,606 |  |  | $ | 878 |
[c] | The details of the income tax provision are as follows:
|  | 2023 |  |  | 2022 |
Current |  |  |  |  |  |  |  |
Canadian |  | $ | 24 |  |  | $ | 5 |
Foreign |  |  | 557 |  |  |  | 452 |
|  |  | 581 |  |  |  | 457 |
Deferred |  |  |  |  |  |  |  |
Canadian |  |  | (26 | ) |  |  | (25 | )
Foreign |  |  | (235 | ) |  |  | (195 | )
|  |  | (261 | ) |  |  | (220 | )
|  | $ | 320 |  |  | $ | 237 |
[d] | Deferred income taxes have been provided on temporary differences, which consist of the following:
|  | 2023 |  |  | 2022 |
Tax depreciation in excess of (less than) book depreciation |  | $ | 33 |  |  | $ | (21 | )
Tax on undistributed foreign earnings |  |  | 4 |  |  |  | (34 | )
Re-measurement of deferred tax assets |  |  | (8 | ) |  |  | (7 | )
Net tax losses (benefit) utilization |  |  | (25 | ) |  |  | 10 |
Unrealized loss on remeasurement of investments |  |  | (26 | ) |  |  | (48 | )
Change in valuation allowance on deferred tax assets |  |  | (47 | ) |  |  | (19 | )
Net (increase) decrease in non-deductible liabilities |  |  | (63 | ) |  |  | 17 |
Book amortization in excess of tax amortization |  |  | (112 | ) |  |  | (89 | )
Others |  |  | (17 | ) |  |  | (29 | )
|  | $ | (261 | ) |  | $ | (220 | )
[e] | Deferred tax assets and liabilities consist of the following temporary differences:
|  | 2023 |  |  | 2022 |
Assets |  |  |  |  |  |  |  |
Tax benefit of loss carryforwards |  | $ | 892 |  |  | $ | 760 |
Liabilities currently not deductible for tax |  |  | 400 |  |  |  | 269 |
Operating lease liabilities |  |  | 399 |  |  |  | 367 |
Other assets tax value in excess of book value |  |  | 150 |  |  |  | 87 |
Tax credit carryforwards |  |  | 90 |  |  |  | 87 |
Unrealized losses on remeasurement of investments |  |  | 79 |  |  |  | 37 |
Unrealized loss on foreign exchange hedges and retirement liabilities |  |  | 44 |  |  |  | 70 |
Others |  |  | 29 |  |  |  | 29 |
|  |  | 2,083 |  |  |  | 1,706 |
Valuation allowance against tax benefit of loss carryforwards |  |  | (597 | ) |  |  | (579 | )
Other valuation allowance |  |  | (221 | ) |  |  | (198 | )
|  | $ | 1,265 |  |  | $ | 929 |
Liabilities |  |  |  |  |  |  |  |
Operating lease right-of-use assets |  |  | 403 |  |  |  | 372 |
Tax depreciation in excess of book depreciation |  |  | 232 |  |  |  | 186 |
Tax on undistributed foreign earnings |  |  | 171 |  |  |  | 171 |
Unrealized gain on foreign exchange hedges and retirement liabilities |  |  | 22 |  |  |  | 21 |
|  |  | 828 |  |  |  | 750 |
Net deferred tax assets |  | $ | 437 |  |  | $ | 179 |
The net deferred tax assets are presented on the consolidated balance sheet in the following categories:
|  | 2023 |  |  | 2022 |
Long-term deferred tax assets |  | $ | 621 |  |  | $ | 491 |
Long-term deferred tax liabilities |  |  | (184 | ) |  |  | (312 | )
|  | $ | 437 |  |  | $ | 179 |
[f] | Deferred income taxes have not been provided on $5.3 billion of undistributed earnings of certain foreign subsidiaries, as the Company has concluded that such earnings should not give rise to additional tax liabilities upon repatriation or are indefinitely reinvested. A determination of the amount of the unrecognized tax liability relating to the remittance of such undistributed earnings is not practicable.
[g] | Income taxes paid in cash [net of refunds] were $546 million for the year ended December 31, 2023 [2022 - $560 million].
[h] | As at December 31, 2023, the Company had domestic and foreign operating loss carryforwards of $3.5 billion and tax credit carryforwards of $90 million. Approximately $2.3 billion of the operating losses can be carried forward indefinitely. The remaining operating losses and tax credit carryforwards expire between 2024 and 2043.
[i] | As at December 31, 2023 and 2022, the Company’s gross unrecognized tax benefits were $220 million and $142 million, respectively [excluding interest and penalties], of which $188 million and $135 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:
|  | 2023 |  |  | 2022 |
Balance, beginning of year |  | $ | 142 |  |  | $ | 142 |
Increase based on tax positions related to current year |  |  | 28 |  |  |  | 52 |
Decrease based on tax positions of prior years |  |  | — |  |  |  | (17 | )
Settlements |  |  | 1 |  |  |  | (10 | )
Foreign currency translation |  |  | 5 |  |  |  | (4 | )
Statute expirations |  |  | (14 | ) |  |  | (21 | )
Acquisitions [note 7] |  |  | 58 |  |  |  | — |
|  | $ | 220 |  |  | $ | 142 |
As at December 31, 2023, the Company recorded interest and penalties on unrecognized tax benefits of $35 million [2022 – $29 million], which reflects an increase of $6 million [2022 – $3 million] in expenses related to changes in its reserves for interest and penalties. The Company operates in multiple jurisdictions and its tax returns are periodically audited or subject to review by both domestic and foreign tax authorities. During the next twelve months, it is reasonably possible that, as a result of audit settlements, the conclusion of current examinations, or the expiration of the statute of limitations in several jurisdictions, the Company may decrease the amount of its gross unrecognized tax benefits [including interest and penalties] by approximately $31 million, which if recognized, would affect its effective tax rate. The Company considers its significant tax jurisdictions to include Canada, the United States, Austria, Germany, Mexico and China. With few exceptions, the Company remains subject to income tax examination in Germany for years after 2011, China and Mexico for years after 2017, Canada and Austria for years after 2018, and U.S. federal jurisdiction for years after 2019.

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