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Income Taxes | 12 Months Ended
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Dec. 31, 2023
Income Taxes [Abstract] |
Income Taxes | Income Taxes Consolidated Statements of Earnings I. Rate Reconciliation
Year ended Dec. 31 | 2023 | 2022 | 2021
Earnings (loss) before income taxes | 880 |  | 353 |  | (380) |
Net earnings attributable to non-controlling interests not subject to tax | (80) |  | (94) |  | (33) |
Adjusted earnings (loss) before income taxes | 800 |  | 259 |  | (413) |
Statutory Canadian federal and provincial income tax rate (%) | 23.4 | % | 23.4 | % | 23.6 | %
Expected income tax expense (recovery) | 187 |  | 61 |  | (98) |
Increase (decrease) in income taxes resulting from: |  |  |
Differences in effective foreign tax rates | 9 |  | (1) |  | 4 |
Non-deductible expense(1) | 58 |  | 130 |  | — |
Taxable capital (gain) loss | (2) |  | 18 |  | — |
Deferred income tax recovery related to temporary difference on investment in subsidiaries | (3) |  | (2) |  | — |
Write-down (reversal of write-down) of unrecognized deferred income tax assets | (178) |  | (24) |  | 134 |
Statutory and other rate differences | 1 |  | (3) |  | 4 |
Adjustments in respect of deferred income tax of previous years | 1 |  | 6 |  | (4) |
Other | 11 |  | 7 |  | 5 |
Income tax expense | 84 |  | 192 |  | 45 |
Effective tax rate (%) | 11 | % | 74 | % | (11 | %)
(1)This amount is related to current and prior period tax adjustments in the US to mitigate cash tax relating to the Base Erosion and Anti-Abuse Tax. II. Components of Income Tax Expense The components of income tax expense are as follows:
Year ended Dec. 31 | 2023 |  | 2022 | 2021 |
Current income tax expense | 50 |  |  | 65 |  | 56 |  |
Deferred income tax expense (recovery) related to the origination and reversal of temporary differences | 215 |  |  | 153 |  | (145) |  |
Deferred income tax recovery related to temporary difference on investment in subsidiaries | (3) |  |  | (2) |  | — |  |
Write-down (reversal of write-down) of unrecognized deferred income tax assets(1) | (178) |  |  | (24) |  | 134 |  |
Income tax expense | 84 |  |  | 192 |  | 45 |  |
Current income tax expense | 50 |  |  | 65 |  | 56 |  |
Deferred income tax expense (recovery) | 34 |  |  | 127 |  | (11) |  |
Income tax expense | 84 |  |  | 192 |  | 45 |  |
(1)During the year ended Dec. 31, 2023, the Company recognized deferred tax assets of $178 million (2022 - $24 million, 2021 - $134 million write-down). The deferred income tax assets mainly relate to the tax benefits associated with tax losses related to the Company's directly owned US operations and other deductible differences. The Company has not recognized an additional $157 million of deferred tax assets on the basis that it is not probable that sufficient future taxable income would be available to utilize these tax assets. Consolidated Statements of Changes in Equity The aggregate current and deferred income tax related to items charged or credited to equity are as follows:
Year ended Dec. 31 | 2023 |  | 2022 | 2021
Income tax expense (recovery) related to: |  |  |  |
Net impact related to cash flow hedges | 27 |  |  | (112) |  | (57) |
Net impact related to hedges of foreign operations | 1 |  |  | (3) |  | — |
Net impact related to net actuarial gains (losses) | (1) |  |  | 12 |  | 11 |
Transaction costs for the acquisition of TransAlta Renewables | (2) |  |  | — |  | — |
Income tax expense (recovery) reported in equity | 25 |  |  | (103) |  | (46) |
Consolidated Statements of Financial Position Significant components of the Company’s deferred income tax assets (liabilities) are as follows:
As at Dec. 31 | 2023 |  | 2022
Non-capital losses(1) | 88 |  |  | 244 |
Future decommissioning and restoration costs | 111 |  |  | 119 |
Property, plant and equipment | (605) |  |  | (553) |
Risk management assets and liabilities, net | 144 |  |  | 193 |
Employee future benefits and compensation plans | 50 |  |  | 48 |
Foreign exchange differences on US-denominated debt | 12 |  |  | 13 |
Other taxable temporary differences | (8) |  |  | (5) |
Net deferred income tax asset (liability), before write-down of deferred income tax assets | (208) |  |  | 59 |
Unrecognized deferred income tax assets | (157) |  |  | (361) |
Net deferred income tax liability, after write-down of deferred income tax assets | (365) |  |  | (302) |
(1)Non-capital losses expire between 2033 and 2043. Net operating losses from US operations have no expiration. The net deferred income tax liability is presented in the Consolidated Statements of Financial Position as follows:
As at Dec. 31 | 2023 |  | 2022
Deferred income tax assets(1) | 21 |  |  | 50 |
Deferred income tax liabilities | (386) |  |  | (352) |
Net deferred income tax liability | (365) |  |  | (302) |
(1)The deferred income tax assets presented on the Consolidated Statements of Financial Position are recoverable based on estimated future earnings and tax planning strategies. The assumptions used in the estimate of future earnings are based on the Company’s long-range forecasts. Contingencies As of Dec. 31, 2023, the Company had recognized a net liability of nil (2022 – nil) related to uncertain tax positions.

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