2023 Consolidated Financial Statements and Notes
AIR CANADA
2023 Consolidated Financial Statements and Notes
Income tax recorded in the consolidated statement of comprehensive income is presented below.
(Canadian dollars in millions)
2023
Remeasurements on employee benefit liabilities
- current income tax (expense) recovery
- deferred income tax (expense) recovery
Income tax (expense) recovery
2022
$
(3)
(45)
$
8
138
$
(48) $
146
The income tax differs from the amount that would have resulted from applying the statutory income tax rate to other
comprehensive income before income tax expense as follows:
(Canadian dollars in millions)
2023
2022
Other comprehensive income (loss) before income taxes
$
Statutory income tax rate based on combined federal and provincial rates
107 $
26.46%
(32)
26.46%
Income tax (expense) recovery based on statutory tax rates
(28)
9
Non-deductible portion of capital loss
(1)
(Unrecognized) recognition of deferred income tax assets
(19)
124
Other
Income tax (expense) recovery
13
$
(48)
$
146
Deferred Income Tax
Deferred income tax assets are recognized only to the extent that it is probable that future taxable income will be
available to realize them. In making this assessment, consideration is given to available positive and negative evidence
and relevant assumptions, including, historical financial results, and expectations relating to future taxable income, the
overall business environment, and industry-wide trends.
As a result of the COVID-19 pandemic, there is considerable negative evidence relating to losses incurred in the prior
years. Such negative evidence currently outweighs the positive evidence and, accordingly, net deferred tax assets are
not being recognized. The future tax deductions underlying the unrecognized deferred income tax assets of $1,504
million remain available for use in the future to reduce taxable income. The deferred income tax expense recorded in
Other comprehensive income (loss) related to remeasurements on employee benefit liabilities is offset by a deferred
income tax recovery which was recorded through the statement of operations. As such, a deferred income tax recovery
of $47 million (2022 - deferred income tax expense of $129 million) was recorded for the year, which is partially
offsetting the deferred income tax expense of $45 million (2022 - deferred income tax recovery of $138 million)
recorded in Other comprehensive income (loss).
Deferred tax assets and liabilities of $50 million are recorded net as a non-current deferred income tax asset and
deferred tax liabilities of $73 million are recorded as a non-current deferred income tax liability on the consolidated
statement of financial position. Certain intangible assets with nominal tax cost and a carrying value of $275 million have
indefinite lives and accordingly, the associated deferred income tax liability of $73 million (2022 - $73 million) is not
expected to reverse until the assets are disposed of, become impaired or amortizable and as a result is included as
part of the non-current deferred income tax liability.
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