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A reconciliation of income taxes at Canadian statutory rates with the reported income taxes was as follows:
2012 2011----------------------------------------------------------------------------Statutory Canadian federal and provincial income tax rates 26.50% 28.25%----------------------------------------------------------------------------Expected taxes on income $ 43,603 $ 40,224Increase (decrease) in income taxes resulting from: Higher (lower) effective tax rates in other jurisdictions 110 (383) Manufacturing and processing rate reduction (218) (198) Expenses not deductible (income not taxable) for tax purposes 902 (919) Non-taxable gains (83) (61) Effect of future income tax rate reductions (320) (28) Other (9) 1,074----------------------------------------------------------------------------Provision for income taxes $ 43,985 $ 39,709--------------------------------------------------------------------------------------------------------------------------------------------------------Effective income tax rate 26.7% 27.9%--------------------------------------------------------------------------------------------------------------------------------------------------------
The statutory income tax rate represents the combined Canadian federal and Ontario provincial income tax rates which are the relevant tax jurisdictions for the Company. The decrease is largely due to the reduction of the Federal income tax rate in 2011 from 18% to 16.5%.
The source of deferred income taxes was as follows:
2012 2011----------------------------------------------------------------------------Accrued liabilities $ 9,681 $ 8,964Deferred revenue 1,193 1,021Accounts receivable 1,273 1,231Inventories 2,866 2,927Capital assets (9,147) (8,454)Pension 7,144 6,705Other 620 503Cash flow hedges in other comprehensive income 67 (148)----------------------------------------------------------------------------Deferred tax assets $ 13,697 $ 12,749--------------------------------------------------------------------------------------------------------------------------------------------------------
The movement in net deferred tax assets was as follows:
2012 2011----------------------------------------------------------------------------Balance, January 1 $ 12,749 $ 10,435Tax (expense) recovery recognized in income (773) 1,450Tax recovery recognized in other comprehensive income 1,721 864----------------------------------------------------------------------------Balance, December 31 $ 13,697 $ 12,749--------------------------------------------------------------------------------------------------------------------------------------------------------
