21. INCOME TAXES We follow the deferred method of accounting for income taxes whereby current income taxes are recognized for the estimated income taxes payable for the current period. Deferred tax assets and liabilities represent the cumulative amount of tax applicable to temporary differences between the carrying amount of the assets and liabilities, and their values for tax purposes. Deferred tax assets and liabilities are measured using enacted or substantively enacted tax rates anticipated to apply to taxable income in the years in which those temporary differences are anticipated to be recovered or settled. Changes in deferred taxes related to a change in tax rates are recognized in income in the period of the tax rate change. All deferred tax assets and liabilities are expected to be realized in the normal course of operations.
The provision for income taxes consists of the following:
2021
2020
Consolidated statements of income Current
$
125,793 $
107,259
Deferred
(2,786)
(10,227)
123,007
97,032
Other comprehensive income Tax expense (recovery) related to:
Items that will be not subsequently reclassified to net income
326
171
Items that will be subsequently reclassified to net income
(11,805)
2,620
Derivatives designated as cash flow hedges
(18,490)
23,434
(29,969)
26,225
Total
$
93,038 $
123,257
Following a 1% reduction of Alberta’s corporate income tax rate on January 1, 2020, the Alberta government accelerated the further reduction of the rate from 10% to 8%, effective July 1, 2020 , as part of the province’s COVID -19 economic recovery plan.
A reconciliation of the statutory tax rates and income tax that would be payable at these rates to the effective income tax rates and provision for income taxes reported in the consolidated statements of income follows:
2021
2020
Combined Canadian federal and provincial income taxes and statutory tax rate
$
119,599
24.9 % $
94,422
25.6 %
Increase (decrease) arising from: Change in tax rate
(520)
(0.1)
1,364
0.4
Tax-exempt income
(75)
-
(34)
-
Stock-based compensation
430
0.1
452
0.1
Adjustments arising from prior year tax filings
1,940 1,633
0.4
(154)
-
Other
0.3
982
0.2
Provision for Income Taxes and Effective Tax Rate
$
123,007
25.6 % $
97,032
26.3 %
Deferred tax balances are comprised of the following:
2021
2020
Deferred Tax Assets Allowance for credit losses
$
19,463 18,003 13,256
$
20,246 25,546 11,994 (4,337) (3,871)
Leasing income
Deferred loan fees
Deferred deposit broker commission
(3,549)
Other temporary differences
3,599
$
50,772
$
49,578
Deferred Tax Liabilities Intangible assets
$
8,368
$
9,689
Other temporary differences
230
267
$
8,598
$
9,956
102 | CWB Financial Group 2021 Annual Report
Powered by FlippingBook