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Note 9 Income taxes

Note 9 Income taxes

The following table shows the significant components of income taxes deducted from net earnings.

FOR THE YEAR ENDED DECEMBER 31

2016   2015  

Current taxes

       

Current taxes

(850 ) (687 )

Uncertain tax positions

(14 ) 27  

Change in estimate relating to prior periods

14   114  

Utilization of previously unrecognized tax credits

  5  

Other

(1 )  

Deferred taxes

       

Deferred taxes relating to the origination and reversal of temporary differences

(299 ) (271 )

Change in estimate relating to prior periods

32 (106 )

Recognition and utilization of loss carryforwards

(1 ) (14 )

Effect of change in provincial corporate tax rate

4 (6 )

Resolution of uncertain tax positions

5   14  

Total income taxes

(1,110 ) (924 )

The following table reconciles the amount of reported income taxes in the income statements with income taxes calculated at a statutory income tax rate of 27.1.% and 26.9% for 2016 and 2015, respectively.

FOR THE YEAR ENDED DECEMBER 31

2016   2015  

Net earnings

3,087   2,730  

Add back income taxes

1,110   924  

Earnings before income taxes

4,197   3,654  

Applicable statutory tax rate

27.1 % 26.9 %

Income taxes computed at applicable statutory rates

(1,137 ) (983 )

Non-taxable portion of gains on investments

11   26  

Uncertain tax positions

(9)   41  

Utilization of previously unrecognized tax credits

  5  

Effect of change in provincial corporate tax rate

4   (6 )

Change in estimate relating to prior periods

46   8  

Non-taxable portion of equity losses

(23 ) (14 )

Other

(2 ) (1 )

Total income taxes

(1,110 ) (924 )

Average effective tax rate

26.4 % 25.3 %

The following table shows aggregate current and deferred taxes relating to items recognized outside the income statements.

FOR THE YEAR ENDED DECEMBER 31

2016

 

2015

 
  OTHER
COMPREHENSIVE
LOSS
  DEFICIT   OTHER
COMPREHENSIVE
INCOME
  DEFICIT  

Current taxes

127   11   29   19  

Deferred taxes

(32 ) 6 (192 ) (3 )

Total income tax recovery (expense)

95 17   (163 ) 16  

The following table shows deferred taxes resulting from temporary differences between the carrying amounts of assets and liabilities recognized in the statements of financial position and their corresponding tax basis, as well as tax loss carryforwards.

NET DEFERRED TAX LIABILITY

NON-
CAPITAL
LOSS
CARRY-
FORWARD
  POST-
EMPLOY-
MENT
BENEFIT
PLANS
  INDEFINITE-
LIFE
INTANGIBLE
ASSETS
  PROPERTY,
PLANT AND
EQUIPMENT
AND
FINITE-LIFE
INTANGIBLE
ASSETS
  INVESTMENT
TAX CREDITS
  CRTC
TANGIBLE
BENEFITS
  OTHER   TOTAL  

January 1, 2015

26   714   (1,554 ) (699 ) (7 ) 75   286   (1,159 )

Income statement

(14 ) (4 ) (64 ) (268 ) 1   (14 ) (20 ) (383 )

Business acquisition

(1 )   (1 )

Business disposition

(1 )   (1 )

Other comprehensive income

  (190 )         (2 ) (192 )

Deficit

            (3 ) (3 )

Other

            4   4  

December 31, 2015

12   520   (1,619 ) (968 ) (6 ) 61   265   (1,735 )

Income statement

(1 ) (28 ) (61 ) (152 ) (3 ) (17 ) 3 (259 )

Business acquisition

10     (79 )     (6 ) (75 )

Other comprehensive income

  (38 )         6 (32 )

Deficit

            6 6

Other

            (8 ) (8 )

December 31, 2016

21   454   (1,680 ) (1,199 ) (9 ) 44   266   (2,103 )

At December 31, 2016, BCE had $221 million of non-capital loss carryforwards. We:

  • recognized a deferred tax asset of $21 million, of which $11 million related to Q9, for $77 million of the non-capital loss carryforwards. These non-capital loss carryforwards expire in varying annual amounts from 2029 to 2036.
  • did not recognize a deferred tax asset for $144 million of non-capital loss carryforwards. This balance expires in varying annual amounts from 2023 to 2035.

At December 31, 2016, BCE had $765 million of unrecognized capital loss carryforwards which can be carried forward indefinitely.

At December 31, 2015, BCE had $197 million of non-capital loss carryforwards. We:

  • recognized a deferred tax asset of $12 million, of which $4 million related to Bell Media, for $44 million of the non-capital loss carryforwards. These non-capital loss carryforwards expire in varying annual amounts from 2030 to 2035.
  • did not recognize a deferred tax asset for $153 million of non-capital loss carryforwards. This balance expires in varying annual amounts from 2023 to 2034.

At December 31, 2015, BCE had $783 million of unrecognized capital loss carryforwards which can be carried forward indefinitely.

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