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Income taxes | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Income taxes | Income taxes The income tax expense (recovery) in the consolidated statements of operations represents an effective tax rate different than the Canadian enacted statutory rate of 26.5% (2023 - 26.5%). The differences are as follows:
| 2024 |  | 2023
Expected income tax expense (recovery) at Canadian statutory rate | $ | 46,953 |  |  | $ | (17,305) |
Increase (decrease) resulting from: |  |  |
Effect of differences in tax rates on transactions in and within foreign jurisdictions and change in tax rates | (17,676) |  |  | (35,776) |
Investment in Atlantica | (8,207) |  |  | 16,997 |
Non-controlling interests share of income | 19,757 |  |  | 10,016 |
Change in valuation allowance | 154,601 |  |  | (388) |
Adjustment relating to prior periods | 2,794 |  |  | (1,412) |
Amortization and settlement of excess deferred income tax | (14,540) |  |  | (12,785) |
Deferred income taxes on regulated income recorded as regulatory assets | (2,380) |  |  | (878) |
Other | 5,495 |  |  | 4,476 |
Income tax expense (recovery) | $ | 186,797 |  |  | $ | (37,055) |
On December 27, 2023, the Government of Bermuda enacted the Bermuda Corporate Income Tax Act 2023, setting a 15% corporate income tax rate effective for fiscal years commencing January 1, 2025. The Bermuda Corporate Income Tax Act 2023 includes various transition adjustments that may affect the recognition of deferred taxes and as such were considered as part of the initial measurement in the period that includes the December 2023 enactment date. No deferred taxes are required to be recognized as at December 31, 2024. For the years ended December 31, 2024 and 2023, earnings (loss) before income taxes consist of the following:
| 2024 |  | 2023
Canada (1) | $ | 50,279 |  |  | $ | (169,624) |
U.S. | 77,397 |  |  | 70,442 |
Other regions | 49,504 |  |  | 37,067 |
| $ | 177,180 |  |  | $ | (62,115) |
(1) Inclusive of fair value gain (loss) on investments carried at fair value (note 8) 17.Income taxes (continued) Income tax expense (recovery) attributable to earnings (loss) consists of:
| Current |  | Deferred |  | Total
Year ended December 31, 2024 |  |  |  |  |
Canada | $ | 4,238 |  |  | $ | 134,193 |  |  | $ | 138,431 |
United States | 1,166 |  |  | 33,110 |  |  | 34,276 |
Other regions | 12,795 |  |  | 1,295 |  |  | 14,090 |
| $ | 18,199 |  |  | $ | 168,598 |  |  | $ | 186,797 |
Year ended December 31, 2023 |  |  |  |  |
Canada | $ | 4,352 |  |  | $ | (66,693) |  |  | $ | (62,341) |
United States | 784 |  |  | 17,747 |  |  | 18,531 |
Other regions | 728 |  |  | 6,027 |  |  | 6,755 |
| $ | 5,864 |  |  | $ | (42,919) |  |  | $ | (37,055) |
The tax effect of temporary differences between the consolidated financial statement carrying amounts of assets and liabilities and their respective tax bases that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of December 31, 2024 and 2023 are presented below:
| 2024 |  | 2023
Deferred tax assets: |  |  |
Non-capital loss, investment tax credits, currently non-deductible interest expenses, and financing costs | $ | 781,761 |  |  | $ | 714,476 |
Outside basis in renewable energy assets | 140,203 |  |  | — |
Pension and OPEB | 515 |  |  | 7,327 |
Environmental obligation | 9,161 |  |  | 8,821 |
Regulatory liabilities | 164,402 |  |  | 180,371 |
Other | 57,680 |  |  | 51,333 |
Total deferred income tax assets | $ | 1,153,722 |  |  | $ | 962,328 |
Less: valuation allowance | (281,894) |  |  | (5,562) |
Total deferred tax assets | $ | 871,828 |  |  | $ | 956,766 |
Deferred tax liabilities: |  |  |
Property, plant and equipment | $ | 866,529 |  |  | $ | 810,025 |
Pension and OPEB | 9,148 |  |  | — |
Outside basis differentials | 165,010 |  |  | 191,990 |
Regulatory accounts | 329,343 |  |  | 317,829 |
Other | 67,753 |  |  | 51,610 |
Total deferred tax liabilities | $ | 1,437,783 |  |  | $ | 1,371,454 |
Net deferred tax liabilities | $ | (565,955) |  |  | $ | (414,688) |
Consolidated balance sheets classification: |  |  |
Deferred tax assets | $ | 11,218 |  |  | $ | 151,576 |
Deferred tax liabilities | (577,173) |  |  | (566,264) |
Net deferred tax liabilities | $ | (565,955) |  |  | $ | (414,688) |
The valuation allowance for deferred tax assets as of December 31, 2024 is $281,894 (2023 - $5,562). The valuation allowance primarily relates to operating losses that, in the judgment of management, are not more likely than not to be realized. 17.Income taxes (continued) Following the announcement of the Renewables Sale, the Company analyzed its corresponding outside basis investment in the former renewable energy group. Based on the Company’s tax basis in the former renewable energy group, the sale is expected to result in a capital loss that is not likely to be realized. A full valuation allowance has been recorded on this outside basis deferred tax asset. In the three months ended December 31, 2024, the Company completed the sale of its investment in Atlantica and determined the expected closing date for the Renewables Sale. Given those two events, the Company reevaluated the remaining Canadian deferred tax asset position and concluded that it is more likely than not that there will not be sufficient taxable income in the future to allow for the realization of these deferred tax assets. As at December 31, 2024, a valuation allowance is recorded against the majority of the remaining net deferred tax assets related to Canadian attributes. The Company will continue to evaluate the realizability of the deferred tax assets at each reporting period and adjust the valuation allowance as necessary. On June 20, 2024, Canada enacted significant tax legislation, including the Excessive Interest and Financing Expenses Limitation rules and legislation for the Global Minimum Tax Act. The enactment had no material impact on the financial results of the Company for the twelve months ended December 31, 2024. The following table illustrates the annual movement in the deferred tax valuation allowance:
| 2024 |  | 2023
Beginning balance | $ | 5,562 |  |  | $ | 5,876 |
Charged to income tax expense (recovery) | 154,601 |  |  | (388) |
Changed to additional paid-in capital | 5,390 |  |  | — |
Valuation Allowance Charged to discontinued operations | (5,143) |  |  | — |
Charged (reduction) to OCI | (17,759) |  |  | 22 |
Tax impact on outside basis difference in renewable assets | 140,202 |  |  | — |
Reductions to other accounts | (959) |  |  | 52 |
Ending balance | $ | 281,894 |  |  | $ | 5,562 |
As of December 31, 2024, the Company had non-capital losses carried forward and tax credits available to reduce future years' taxable income, which expire as follows:
Non-capital loss carryforward and credits | 2025—2029 | 2030+ | Total
Canada | $ | 323 |  | $ | 671,622 |  | $ | 671,945 |
US | — |  | 1,420,259 |  | 1,420,259 |
Total non-capital loss carryforward | $ | 323 |  | $ | 2,091,881 |  | $ | 2,092,204 |
Tax credits | $ | 2,349 |  | $ | 213,498 |  | $ | 215,847 |
The Company has provided for deferred income taxes for the estimated tax cost of distributed earnings of certain of its subsidiaries. Deferred income taxes have not been provided on approximate l y $1,042,117 of undistributed earnings of certain foreign subsidiaries, as the Company has concluded that such earnings are indefinitely reinvested and should not give rise to additional tax liabilities. A determination of the amount of the unrecognized tax liability relating to the remittance of such undistributed earnings is not practicable.

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