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6. Income Taxes
Income tax expense includes current tax expense on income for the March 2, 2012 to December 31, 2012 period. Prior to the Exchange on March 2, 2012, taxes were minimal reflecting the non-taxable status of the Partnership (Note 11).
3 months ended 12 months ended(millions of Canadian dollars) December 31, 2012 December 31, 2012----------------------------------------------------------------------------Current $ (2.0) $ (1.4)Deferred 0.3 (0.6)----------------------------------------------------------------------------Income tax expense $ (1.7) $ (2.0)--------------------------------------------------------------------------------------------------------------------------------------------------------
The reconciliation of income taxes calculated at the statutory rate to the actual income tax provision is as follows:
3 months ended 12 months ended(millions of Canadian dollars) December 31, 2012 December 31, 2012----------------------------------------------------------------------------Income tax expense at statutory rate 2012 - 25.0% $ (1.6) $ (3.9)Add (deduct): Tax recovery (expense) at rates other than statutory rate 0.1 (0.1) Permanent difference from capital gains and other non-deductible items (0.2) 0.2 Permanent difference - exchange transaction - 0.9 Tax included in equity - exchange transaction - 0.9----------------------------------------------------------------------------Income tax expense $ (1.7) $ (2.0)--------------------------------------------------------------------------------------------------------------------------------------------------------
In addition to the amounts recorded to net income, a tax recovery of $0.6 million was recorded to other comprehensive income for the three month period ended December 31, 2012 in relation to the actuarial losses on defined benefit employee compensation plans. For the twelve months ended December 31, 2012, the related tax recovery was $4.1 million.
The tax effects of the significant components of temporary differences that give rise to deferred income tax assets and liabilities are as follows:
As at(millions of Canadian dollars) December 31, 2012----------------------------------------------------------------------------Deferred income tax assets Retirement benefit obligations $ 26.0 Other 1.6---------------------------------------------------------------------------- $ 27.6----------------------------------------------------------------------------Deferred income tax liabilities Depreciable capital assets $ (84.9) Unrealized foreign exchange gains on debt (current) (2.0) Other (0.3)---------------------------------------------------------------------------- $ (87.2)----------------------------------------------------------------------------Total deferred income taxes, net $ (59.6)--------------------------------------------------------------------------------------------------------------------------------------------------------
