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Income Taxes
 6 Months Ended 12 Months Ended
Jun. 30, 2022
Dec. 31, 2021
Income Taxes [Abstract]    
Income Taxes
NOTE 11. INCOME TAXES
 
(a)
Income Tax Recognized in Net Earnings
The components of income tax expense were as follows:
 
  
Three months ended
June 30,
 
  
Six months ended
June 30,
 
 
  
2022
 
  
2021
 
  
2022
 
  
2021
 
Current income taxe
s
  
$
4,992
 
  
$
7,389
 
  
$
8,355
 
  
$
10,498
 
Deferred income taxes
  
 
(1,920
) 
  
 
1,361
 
  
 
(1,662
) 
  
 
(3,159
) 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
  
$
3,072
 
  
$
8,750
 
  
$
6,693
 
  
$
7,339
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
(b)
Reconciliation of Tax Expense
The provision for income taxes differs from that which would be expected by applying Canadian statutory rates. A reconciliation of the difference is as follows:
 
  
Three months ended
June 30,
 
 
Six months ended
June 30,
 
 
  
2022
 
 
2021
 
 
2022
 
 
2021
 
Earnings before income taxes
  
$
16,424
 
 
$
13,041
 
 
$
19,676
 
 
$
14,633
 
Canadian statutory rate
  
 
23.4
% 
 
 
23.8
% 
 
 
23.4
% 
 
 
23.8
% 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expected income tax provision
  
$
3,843
 
 
$
3,104
 
 
$
4,604
 
 
$
3,483
 
Add (deduct):
  
      
 
      
 
      
 
      
Exchange rate effects on tax basis
  
 
(1,064
) 
 
 
1,200
 
 
 
(2,736
) 
 
 
(285
) 
Earnings taxed in foreign jurisdictions
  
 
(1,674
) 
 
 
1,977
 
 
 
(1,269
) 
 
 
1,373
 
Withholding tax on dividends received from foreign subsidiaries
  
 
—  
 
 
 
2,763
 
 
 
—  
 
 
 
2,763
 
Amounts not deductible (taxable) for tax purposes
  
 
79
 
 
 
211
 
 
 
243
 
 
 
358
 
Impact of accounting for associates and joint ventures
  
 
(130
) 
 
 
(44
) 
 
 
(198
) 
 
 
53
 
Change in recognized deferred tax asset
1
  
 
1,866
 
 
 
—  
 
 
 
5,790
 
 
 
—  
 
Other
  
 
152
 
 
 
(461
) 
 
 
259
 
 
 
(406
) 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax expense from continuing operations
  
$
3,072
 
 
$
8,750
 
 
$
6,693
 
 
$
7,339
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1
This balance is the result of the Company no longer recognizing deferred tax recoveries in Canada, as it is unlikely that sufficient future taxable income will be available to offset against the existing deductible temporary differences and any unused Canadian tax losses or credits.
The applicable statutory tax rate is the aggregate of the Canadian federal income tax rate of 15.0 percent (2021 – 15.0 percent) and provincial income tax rate of 8.4 percent (2021 – 8.8 percent).
The Company’s effective tax rate is subject to fluctuations in the Argentine peso and Mexican peso exchange rate against the U.S. dollar. Since the Company holds significant rental assets in Argentina and Mexico, the tax base of these assets is denominated in Argentine peso and Mexican peso, respectively. The functional currency is, however, the U.S. dollar and as a result, the related local currency tax bases are revalued periodically to reflect the closing U.S. dollar rate against these currencies. Any movement in the exchange rate results in a corresponding unrealized exchange rate gain or loss being recorded as part of deferred income tax expense or recovery. During periods of large fluctuation or devaluation of the local currency against the U.S. dollar, these amounts may be significant but are unrealized and may reverse in the future. Recognition of these amounts is required by IFRS, even though the revalued tax basis does not generate any cash tax obligation or liability in the future.
NOTE 20. INCOME TAXES
 
(a)
Income Tax Recognized in Net Earnings
The components of income tax expense were as follows:
 
Years ended December 31,
   
2021
      2020      2019  
Current income taxes
   
$
13,135
 
    $ (6,872 )     $ 31,720  
Deferred income taxes
   
 
43,422
 
      14,174        31,476  
    
 
 
     
 
 
     
 
 
  
    
$
56,557
 
    $ 7,302      $ 63,196  
    
 
 
     
 
 
     
 
 
  
(b)
Reconciliation of Tax Expense
The provision for income taxes differs from that which would be expected by applying Canadian statutory rates. A reconciliation of the difference is as follows:
 
Years ended December 31,
   
2021
     2020     2019  
Earnings before income taxes
   
$
38,102
 
   $ 95,559     $ 215,324  
Canadian statutory rate
   
 
23.8
% 
     24.4 %      26.5 % 
    
 
 
    
 
 
    
 
 
  
Expected income tax provision
   
$
9,068
 
   $ 23,316     $ 57,061  
Add (deduct):
                         
Exchange rate effects on tax basis
   
 
(2,269
) 
     (4,007 )      2,125  
Earnings taxed in foreign jurisdictions
   
 
2,313
 
     (14,505 )      (1,129 ) 
Revaluation of Canadian deferred tax assets due to change in statutory rate
   
 
(660
) 
     597       5,040  
Withholding tax on dividends received from foreign subsidiaries
   
 
2,763
 
     —         —    
Amounts not deductible (taxable) for tax purposes
   
 
811
 
     2,426       723  
Impact of accounting for associates and joint ventures
   
 
(160
) 
     (530 )      (575 ) 
Change in recognized deferred tax assets
   
 
44,704
 
     —         —    
Other
   
 
(13
) 
     5       (49 ) 
    
 
 
    
 
 
    
 
 
  
Income tax expense from continuing operations
   
$
56,557
 
   $ 7,302     $ 63,196  
    
 
 
    
 
 
    
 
 
  
The applicable statutory tax rate is the aggregate of the Canadian federal income tax rate of 15.0 percent (2020 – 15.0 percent; 2019 – 15.0 percent) and provincial income tax rates of 8.8 percent (2020 – 9.4 percent; 2019 – 11.5 percent). During the fourth quarter of 2020, lower Alberta corporate income tax rates became
substantively
enacted. The Alberta corporate income tax rates are 11.5 percent for 2019, 8.99 percent for 2020, and 8.0 percent thereafter.
The Company’s effective tax rate is subject to fluctuations in the Argentine peso and Mexican peso exchange rate against the U.S. dollar. Since the Company holds significant rental assets in Argentina and Mexico, the tax base of these assets is denominated in Argentine peso and Mexican peso, respectively. The functional currency is, however, the U.S. dollar and as a result, the related local currency tax bases are revalued periodically to reflect the closing U.S. dollar rate against these currencies. Any movement in the exchange rate results in a corresponding unrealized exchange rate gain or loss being recorded as part of deferred income tax expense or recovery. During periods of large fluctuation or devaluation of the local currency against the U.S. dollar, these amounts may be significant but are unrealized and may reverse in the future. Recognition of these amounts is required by IFRS, even though the revalued tax basis does not generate any cash tax obligation or liability in the
future.
(c)
Income Tax Recognized in Other Comprehensive Income
 
Years ended December 31,
   
2021
      2020      2019  
Deferred Tax
                           
Arising on income and expenses recognized in other comprehensive income:
                           
Fair value remeasurement of hedging instruments entered into for cash flow hedges
   
$
77
 
    $ 186      $ (286 ) 
Arising on income and expenses reclassified from other comprehensive income to net earnings:
                           
Relating to cash flow hedges
   
 
(53
) 
      158        276  
Arising on foreign exchange movement on long-term debt:
                           
Relating to net investment hedge
   
 
—  
 
      61        —    
    
 
 
     
 
 
     
 
 
  
Total income tax recognized in other comprehensive income
   
$
24
 
    $ 405      $ (10 ) 
    
 
 
     
 
 
     
 
 
  
 
(d)
Net Deferred Tax Assets (Liabilities)
Deferred tax assets and liabilities arise from the following:
 
 
  
Accounting
provisions
and accruals
 
 
Tax losses
 
 
Long-term
assets
 
 
Other
 
 
Exchange
rate effects
on tax bases
 
 
Cash flow
hedges
 
 
Total
1
 
January 1, 2021
    $ 18,058     $ 28,969     $ (73,956 )    $ 544     $ (12,799 )    $ (8 )    $ (39,192 ) 
Charged to net earnings
      (10,945 )      (21,808 )      (12,398 )      (572 )      2,269       32       (43,422 ) 
Charged to OCI
      —         —         —         —         —         (24 )      (24 ) 
Exchange differences
      (91 )      (642 )      99       539       54      
—
       (41 ) 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
December 31, 2021
   
$
7,022
 
  
$
6,519
 
  
$
(86,255
) 
  
$
511
 
  
$
(10,476
) 
  
$
—
 
  
$
(82,679
) 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
 

1
 
Net deferred tax liabilities at December 31, 2021 of $82.7 million consist of liabilities of $92.0 million net of assets of $9.3 million.
 
 
  
Accounting
provisions
and accruals
 
 
Tax losses
 
  
Long-term
assets
 
 
Other
 
 
Exchange
rate effects
on tax bases
 
 
Cash flow
hedges
 
 
Total
1
 
January 1, 2020
    $ 19,449     $ 26,082      $ (57,684 )    $ 1,330     $ (17,144 )    $ 335     $ (27,632 ) 
Charged to net earnings
      (2,080 )      2,661        (18,003 )      (756 )      4,007       —         (14,171 ) 
Charged to OCI
      —         —          —         (61 )      —         (344 )      (405 ) 
Exchange differences
      689       226        1,731       31       338       1       3,016  
    
 
 
    
 
 
     
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
December 31, 2020
    $ 18,058     $ 28,969      $ (73,956 )    $ 544     $ (12,799 )    $ (8 )    $ (39,192 ) 
    
 
 
    
 
 
     
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
 
1
 
Net deferred tax liabilities at December 31, 2020 of $39.2 million consist of liabilities of $87.4 million net of assets of $48.2 million.
 
(e)
Unrecognized Deferred Tax Assets
As at December 31, 2021, the Company did not recognize deductible temporary differences of $225.9 million (December 31, 2020 – $49.7 
million) and unused Canadian tax credits of 
$1.1 million (December 31, 2020 – nil
) for which it is unlikely that sufficient future taxable income will be available to offset against. The derecognition of certain deferred tax assets in Canada was due to a combination of factors which include losses in recent prior
periods
, current period losses and continued challenging market conditions. The deductible temporary differences consist of:
 
Years ended December 31,
   
2021
      2020  
Canadian:
                  
Tax losses
   
$
138,408
 
    $ —    
Capital assets
   
 
22,758
 
      —    
Accounting provisions & other accruals
   
 
26,363
 
      —    
Foreign:
                  
Tax losses
      38,374        49,667  
    
 
 
     
 
 
  
    
$
225,903
 
    $ 49,667  
    
 
 
     
 
 
  
The Company’s unused tax losses and tax credits are subject to expiration in the years 2022 through 2041.