Income Taxes

12 Months Ended

Dec. 31, 2024

Note 19. Income Taxes

(a)

Income Tax Recognized in Net Earnings

The components of income taxes were as follows:


Years ended December 31,	2024			2023


Current income taxes	$	72		$	39

Deferred income taxes		(23	)		(8	)

Income taxes	$	49		$	31

(b)

Reconciliation of Income Taxes

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,	2024			2023


Earnings (loss) before income taxes	$	81		$	(52	)
Canadian statutory rate		23.4	%		23.5	%
Expected income tax provision	$	19		$	(12	)
Add (deduct):
Earnings taxed in foreign jurisdictions		22			2
Change in unrecognized deferred tax asset		15			16
Amounts not deductible (taxable) for tax purposes		7			(7	)
Impact of OCED Pillar Two current taxes		3			-
Exchange rate effects on tax basis		(16	)		17
Impairment of goodwill		-			15
Other		(1	)		-
Income taxes	$	49		$	31

The applicable statutory tax rate is the aggregate of the Canadian federal income tax rate of 15.0 percent (2023 – 15.0 percent) and provincial income tax rate of 8.4 percent (2023 – 8.5 percent).

The Company’s effective tax rate is subject to fluctuations in the Argentine peso and Mexican peso exchange rate against the USD. Since the Company holds significant EI assets in Argentina and Mexico, the tax base of these assets are denominated in Argentine peso and Mexican peso, respectively. The functional currency is the USD and as a result, the related local currency tax bases are revalued periodically to reflect the closing USD rate against the local currency. 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 USD, 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.

The Company did not recognize income tax in other comprehensive income (loss) for the years ended December 31, 2024 and 2023.

(c)

Net Deferred Tax Assets (Liabilities)

Deferred tax assets and liabilities arise from the following:


	Accounting provisions and accruals			Tax losses		Long-term assets			Exchange rate effects on tax bases			Total1


December 31, 2023	$	27		$	27	$	(69	)	$	(29	)	$	(44	)
Charged to net earnings		(14	)		3		15			19			23
Exchange differences		2			-		(2	)		(3	)		(3	)

December 31, 2024	$	15		$	30	$	(56	)	$	(13	)	$	(24	)

1 Net deferred tax liabilities at December 31, 2024, of $24 million consist of liabilities of $48 million net of assets of $24 million.


	Accounting provisions and accruals		Tax losses			Long-term assets			Exchange rate effects on tax bases			Total1


January 1, 2023	$	3	$	42		$	(82	)	$	(12	)	$	(49	)
Charged to net loss		23		(15	)		16			(16	)		8
Exchange differences		1		-			(3	)		(1	)		(3	)

December 31, 2023	$	27	$	27		$	(69	)	$	(29	)	$	(44	)

1 Net deferred tax liabilities at December 31, 2023, of $44 million consist of liabilities of $65 million net of assets of $21 million (January 1, 2023 – net deferred tax liabilities of $49 million consist of liabilities of $65 million net of assets of $16 million).

(d)

Unrecognized Deferred Tax Assets

As at December 31, 2024, the Company did not recognize deductible temporary differences of $955 million (December 31, 2023 – $915 million) and unused Canadian tax credits of $1 million (December 31, 2023 – $1 million) for which it is unlikely that sufficient future taxable income will be available to offset against. An additional $62 million (December 31, 2023 – $59 million) of US tax credits were acquired, but utilization is restricted and therefore, the benefit is not recognized.

The deductible temporary differences consist of:


Years ended December 31,	2024			2023


Canadian:

Tax losses	$	229		$	254

Restricted interest		39			-

Long-term assets		(2	)		1

Accounting provisions and other accruals		35			15

Foreign:

Tax losses		646			688

Restricted interest		13			-

Long-term assets		(5	)		(41	)

Accounting provisions and other accruals		-			(2	)


Total unrecognized deferred tax assets	$	955		$	915

The Company’s unused tax losses and tax credits are subject to expiration in the years 2025 through 2044 with some having an indefinite life.