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Income Taxes | 12 Months Ended
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Dec. 31, 2012
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, 2012 $ |  |  | December 31, 2011 $ |
Deferred tax assets: |  |  |  |  |  |  |  |
Vessels and equipment |  |  | 58,825 |  |  |  | 76,582 |
Tax losses carried forward(1) |  |  | 427,443 |  |  |  | 380,299 |
Other |  |  | 64,194 |  |  |  | 95,312 |
Total deferred tax assets |  |  | 550,462 |  |  |  | 552,193 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Vessels and equipment |  |  | 26,503 |  |  |  | 60,776 |
Long-term debt |  |  | 33,764 |  |  |  | 24,918 |
Other |  |  | 40,117 |  |  |  | 45,624 |
Total deferred tax liabilities |  |  | 100,384 |  |  |  | 131,318 |
Net deferred tax assets |  |  | 450,078 |  |  |  | 420,875 |
Valuation allowance |  |  | (421,343 | ) |  |  | (398,559 | )
Net deferred tax assets |  |  | 28,735 |  |  |  | 22,316 |
Net deferred tax assets are presented in other non-current assets in the accompanying consolidated balance sheets.
(1) | Substantially all of the Company’s net operating loss carryforwards of $1.69 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 December 31, 2012 $ |  |  | Year Ended December 31, 2011 $ |  |  | Year Ended December 31, 2010 $ |
Current |  |  | 9,167 |  |  |  | (6,768 | ) |  |  | (13,129 | )
Deferred |  |  | 5,239 |  |  |  | 2,478 |  |  |  | 19,469 |
Income tax recovery (expense) |  |  | 14,406 |  |  |  | (4,290 | ) |  |  | 6,340 |
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 December 31, 2012 $ |  |  | Year Ended December 31, 2011 $ |  |  | Year Ended December 31, 2010 $ |
Net loss before taxes |  |  | (325,522 | ) |  |  | (372,131 | ) |  |  | (172,975 | )
Net loss not subject to taxes |  |  | (129,307 | ) |  |  | (341,473 | ) |  |  | (416,684 | )
Net (loss) income subject to taxes |  |  | (196,215 | ) |  |  | (30,658 | ) |  |  | 243,709 |
At applicable statutory tax rates |  |  | (15,808 | ) |  |  | (8,987 | ) |  |  | 57,737 |
Permanent and currency differences |  |  | (253,143 | ) |  |  | (172,368 | ) |  |  | (104,514 | )
Adjustments to valuation allowances and uncertain tax positions |  |  | 250,327 |  |  |  | 179,675 |  |  |  | 40,863 |
Other |  |  | 4,218 |  |  |  | 5,970 |  |  |  | (426 | )
Tax expense (recovery) related to the current year |  |  | (14,406 | ) |  |  | 4,290 |  |  |  | (6,340 | )
The following is a roll-forward of the Company’s unrecognized tax benefits, recorded in other long-term liabilities, from January 1, 2010 to December 31, 2012:
|  | Year ended December 31, 2012 $ |  |  | Year ended December 31, 2011 $ |  |  | Year ended December 31, 2010 $ |
Balance of unrecognized tax benefits as at January 1 |  |  | 39,804 |  |  |  | 45,302 |  |  |  | 40,943 |
Increase for positions taken in prior years |  |  | — |  |  |  | 83 |  |  |  | 4,037 |
Increase for positions related to the current year |  |  | 4,560 |  |  |  | 3,308 |  |  |  | 8,979 |
Decreases for positions taken in prior years |  |  | (5,085 | ) |  |  | — |  |  |  | (4,557 | )
Decreases related to statute of limitations |  |  | (9,915 | ) |  |  | (8,889 | ) |  |  | (4,100 | )
Balance of unrecognized tax benefits as at December 31 |  |  | 29,364 |  |  |  | 39,804 |  |  |  | 45,302 |
The majority of the net decrease for positions for the year ended December 31, 2012 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 2008 through 2012 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 a reduction of $0.8 million in 2012, net of statute barred liabilities, and $1.8 million in 2011 and $1.2 million in 2010.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
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