Income and other taxes:

a) Income tax expense:



For the years ended December 31	2019			2018
Current tax recovery (expense):
Current period before undernoted items	$	(38,953	)	$	(117,496	)
Benefit from unrecognised loss carry forwards	—			23,860
Adjustments to prior years	144			2,609
	(38,809		)	(91,027		)
Deferred tax recovery (expense):
Origination and reversal of temporary differences	31,389			(56,258		)
Adjustments to prior years	(138		)	(2,331		)
Changes in tax rates	2,141			35
Other	943			(3,910		)
	34,335			(62,464		)
Total income tax expense	$	(4,474	)	$	(153,491	)

b) Reconciliation of the effective tax rate:

The Company operates in several tax jurisdictions and therefore its income is subject to various rates of taxation. Income tax expense differs from the amounts that would be obtained by applying the Canadian statutory income tax rate to net income before income taxes as follows:



For the years ended December 31	2019			2018
Income before income taxes	$	120,840		$	811,475
Deduct earnings of associate	(52,218		)	(72,001		)
	68,622			739,474
Canadian statutory tax rate	26.8		%	27.0		%
Income tax expense calculated at Canadian statutory tax rate	(18,411		)	(199,658		)
Decrease (increase) in income tax expense resulting from:
Impact of income and losses taxed in foreign jurisdictions	7,001			15,754
Utilization of unrecognised loss carryforwards and temporary differences	6,945			31,325
Impact of tax rate changes	2,141			35
Impact of foreign exchange	(484		)	(173		)
Other business taxes	(2,798		)	(7,750		)
Impact of non-taxable recovery items	1,826			7,015
Adjustments to prior years	6			278
Other	(700		)	(317		)
Total income tax expense	$	(4,474	)	$	(153,491	)

Effective from July 1, 2019 changes in Alberta provincial corporate income tax rates resulted in a lower statutory tax rate applicable to Methanex in Canada in 2019 when compared to 2018.

c) Net deferred income tax liabilities:

(i) The tax effect of temporary differences that give rise to deferred income tax liabilities and deferred income tax assets are as follows:



As at				Dec 31, 2019									Jan 1, 2019
	Net			Deferred tax assets			Deferred tax liabilities			Net			Deferred tax assets			Deferred tax liabilities
Property, plant and equipment (owned)	$	(447,077	)	$	(250,890	)	$	(196,187	)	$	(425,743	)	$	(212,087	)	$	(213,656	)
Right-of-use assets	(45,501		)	(26,725		)	(18,776		)	(53,400		)	(39,600		)	(13,800		)
Repatriation taxes	(93,363		)	—			(93,363		)	(94,446		)	—			(94,446		)
Other	(10,424		)	(48		)	(10,376		)	(14,930		)	(6,700		)	(8,230		)
	(596,365		)	(277,663		)	(318,702		)	(588,519		)	(258,387		)	(330,132		)
Non-capital loss carryforwards	286,004			286,004			—			233,237			233,237			—
Lease obligations	56,802			33,979			22,823			63,415			45,239			18,176
Share-based compensation	3,075			—			3,075			10,908			1,170			9,738
Other	89,278			69,294			19,984			63,806			38,806			25,000
	435,159			389,277			45,882			371,366			318,452			52,914
Net deferred income tax assets (liabilities)	$	(161,206	)	$	111,614		$	(272,820	)	$	(217,153	)	$	60,065		$	(277,218	)

The comparative as at January 1, 2019 has been presented to reflect the adjustments in adoption of IFRS 16. Deferred tax assets/liabilities in respect of finance leases held as at December 31, 2018 that were previously reflected under Other have been presented under the right-of-use assets and lease obligations as at January 1, 2019 and as at December 31, 2019. The table below shows the impact of the adjustment on adoption of IFRS 16 and new presentation to the December 31, 2018 finance lease balances:



As at				Jan 1, 2019									Dec 31, 2018
	Net			Deferred tax assets			Deferred tax liabilities			Net			Deferred tax assets			Deferred tax liabilities
Property, plant and equipment (owned)	$	(425,743	)	$	(212,087	)	$	(213,656	)	$	(425,743	)	$	(212,087	)	$	(213,656	)
Right-of-use assets	(53,400		)	(39,600		)	(13,800		)	—			—			—
Repatriation taxes	(94,446		)	—			(94,446		)	(94,446		)	—			(94,446		)
Other	(14,930		)	(6,700		)	(8,230		)	(14,930		)	(6,700		)	(8,230		)
	(588,519		)	(258,387		)	(330,132		)	(535,119		)	(218,787		)	(316,332		)
Non-capital loss carryforwards	233,237			233,237			—			233,237			233,237			—
Lease obligations	63,415			45,239			18,176			—			—			—
Share-based compensation	10,908			1,170			9,738			10,908			1,170			9,738
Other	63,806			38,806			25,000			69,292			43,912			25,380
	371,366			318,452			52,914			313,437			278,319			35,118
Net deferred income tax assets (liabilities)	$	(217,153	)	$	60,065		$	(277,218	)	$	(221,682	)	$	59,532		$	(281,214	)

As at December 31, 2019, deferred income tax assets have been recognized in respect of non-capital loss carryforwards generated in the United States. These loss carryforwards expire as follows:



	Dec 31 2019
	Gross amount		Tax effect
Expire
Losses generated in 2015 (expires 2035)	$	333,240	$	76,645
Losses generated in 2016 (expires 2036)	432,581		99,494
Losses generated in 2017 (expires 2037)	234,941		54,036
	1,000,762		230,175
No expiry
Losses generated in 2019	242,734		55,829
Total non-capital loss carryforwards	$	1,243,496	$	286,004

Losses generated in the United States on or after January 1, 2018 may be carried forward indefinitely against future taxable income. Tax losses generated before December 31, 2017 may be carried forward for a 20 year period.

As at December 31, 2019 the Company had $323 million (2018 - $ 354 million) of deductible temporary differences in the United States that have not been recognized.

(ii) Analysis of the change in deferred income tax assets and liabilities:



				2019								2018
	Net			Deferred tax assets		Deferred tax liabilities			Net			Deferred tax assets			Deferred tax liabilities
Balance, January 1	$	(221,682	)	$	59,532	$	(281,214	)	$	(164,091	)	$	102,341		$	(266,432	)
Adjustment on adoption of IFRS 16	4,529			533		3,996			—			—			—
Balance, January 1 (restated)	(217,153		)	60,065		(277,218		)	(164,091		)	102,341			(266,432		)
Deferred income tax recovery (expense) included in net income	34,335			28,875		5,460			(62,464		)	(44,277		)	(18,187		)
Deferred income tax recovery included in other comprehensive income	22,049			21,871		178			3,980			1,253			2,727
Other	(437		)	803		(1,240		)	893			215			678
Balance, December 31	$	(161,206	)	$	111,614	$	(272,820	)	$	(221,682	)	$	59,532		$	(281,214	)