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Income Taxes
 12 Months Ended
Dec. 31, 2011
Income Taxes [Abstract]  
Income Taxes
21. Income Taxes

Teekay and a majority of its subsidiaries are not subject to income tax in the jurisdictions in which they are incorporated because they do not conduct business or operate in those jurisdictions. However, among others, the Company’s Australian ship-owing subsidiaries and its Norwegian subsidiaries are subject to income taxes.

The significant components of the Company’s deferred tax assets and liabilities are as follows:

 

                 
    December 31,     December 31,  
    2011     2010  
    $     $  

Deferred tax assets:

                

Vessels and equipment

     76,582       2,182  

Tax losses carried forward (1)

     380,299       286,499  

Other

     95,312       97,945  
   

 

 

    

 

 

  

Total deferred tax assets

     552,193       386,626  
   

 

 

    

 

 

  

Deferred tax liabilities:

                

Vessels and equipment

     60,776       122,263  

Long-term debt

     24,918       31,077  

Other

     45,624       2,900  
   

 

 

    

 

 

  

Total deferred tax liabilities

     131,318       156,240  

Net deferred tax assets

     420,875       230,386  

Valuation allowance

     (398,559 )      (213,385 ) 
   

 

 

    

 

 

  

Net deferred tax assets (liabilities)

     22,316       17,001  
   

 

 

    

 

 

  

 

(1) Substantially all of the Company’s net operating loss carryforwards of $1.27 billion relate to its Australian ship-owning subsidiaries and its Norwegian subsidiaries. These net operating loss carryforwards are available to offset future taxable income in the respective jurisdictions, and can be carried forward indefinitely.

The components of the provision for income taxes are as follows:

 

                         
    Year Ended     Year Ended     Year Ended  
    December 31, 2011     December 31, 2010     December 31, 2009  
    $     $     $  

Current

     (6,768 )      (13,129 )      (28,312 ) 

Deferred

     2,478       19,469       5,423  
   

 

 

    

 

 

    

 

 

  

Income tax (expense) recovery

     (4,290 )      6,340       (22,889 ) 
   

 

 

    

 

 

    

 

 

  

The Company operates in countries that have differing tax laws and rates. Consequently, a consolidated weighted average tax rate will vary from year to year according to the source of earnings or losses by country and the change in applicable tax rates. Reconciliations of the tax charge related to the relevant year at the applicable statutory income tax rates and the actual tax charge related to the relevant year are as follows:

 

 

                         
    Year Ended     Year Ended     Year Ended  
    December 31,
2011		     December 31,
2010		     December 31,
2009		  
    $     $     $  

Net (loss) income before taxes

     (382,431 )      (172,975 )      232,666  

Net (loss) income not subject to taxes

     (351,773 )      (416,684 )      550,299  
   

 

 

    

 

 

    

 

 

  

Net (loss) income subject to taxes

     (30,658 )      243,709       (317,633 ) 
   

 

 

    

 

 

    

 

 

  

At applicable statutory tax rates

     (8,987 )      57,737       (89,395 ) 

Permanent and currency differences

     (172,368 )      (104,514 )      109,857  

Adjustments to valuation allowances and uncertain tax

positions

     179,675       40,863       1,623  

Other

     5,970       (425 )      804  
   

 

 

    

 

 

    

 

 

  

Tax expense (recovery) related to the current year

     4,290       (6,340 )      22,889  
   

 

 

    

 

 

    

 

 

  

The following is a roll-forward of the Company’s unrecognized tax benefits, recorded in other long-term liabilities, from January 1, 2009 to December 31, 2011:

 

                         
    2011
$		     2010
$		     2009
$		  

Balance of unrecognized tax benefits as at January 1

     45,302       40,943       17,296  

Increase for positions taken in prior years

     83       4,037       —    

Increase for positions related to the current year

     3,308       8,979       27,552  

Decreases for positions taken in prior years

     —         (4,557 )      (3,905 ) 

Decreases related to statute of limitations

     (8,889 )      (4,100 )      —    
   

 

 

    

 

 

    

 

 

  

Balance of unrecognized tax benefits as at December 31

     39,804       45,302       40,943  
   

 

 

    

 

 

    

 

 

  

The majority of the net decrease for positions for the year ended December 31, 2011 relates to potential tax on freight income.

The Company does not presently anticipate such uncertain tax positions will significantly increase or decrease in the next 12 months; however, actual developments could differ from those currently expected. The tax years 2007 through 2010 remain open to examination by some of the major taxing jurisdictions in which the Company is subject to tax.

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. The interest and penalties on unrecognized tax benefits are included in the roll-forward schedule above and are approximately $1.8 million in 2011, $1.2 million in 2010 and $8.5 million in 2009.