Notes to Consolidated Financial Statements

1.	Description of TransCanada's Business
2.	Accounting Policies
3.	Accounting Changes
4.	Segmented Information
5.	Plant, Property and Equipment
6.	Goodwill
7.	Rate-Regulated Businesses
8.	Joint Venture Investments
9.	Intangibles and Other Assets
10.	Notes Payable
11.	Deferred Amounts
12.	Income Taxes
13.	Long-Term Debt

14.	Long-Term Debt of Joint Ventures
15.	Junior Subordinated Notes
16.	Non-Controlling Interests
17.	Common Shares
18.	Preferred Shares
19.	Asset Retirement Obligations
20.	Employee Future Benefits
21.	Risk Management and Financial Instruments
22.	Changes in Operating Working Capital
23.	Acquisitions and Dispositions
24.	Commitments, Contingencies and Guarantees
25.	United States Accounting Principles and Reporting

Note 12: Income Taxes

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Provision for Income Taxes

Year ended December 31 (millions of dollars)	2011	2010	2009
Current
Canada	211	29	(70)
Foreign	(2)	(170)	100
	209	(141)	30

Future
Canada	138	170	339
Foreign	226	351	18
	364	521	357
Income Tax Expense	573	380	387

Geographic Components of Income

Year ended December 31 (millions of dollars)	2011	2010	2009
Canada	1,175	798	1,095
Foreign	1,109	969	768
Income before Income Taxes	2,284	1,767	1,863

Reconciliation of Income Tax Expense

Year ended December 31 (millions of dollars)	2011	2010	2009
Income before Income Taxes	2,284	1,767	1,863
Federal and provincial statutory tax rate	26.5%	28.0%	29.0%
Expected income tax expense	605	495	540
Income tax differential related to regulated operations	42	8	39
Lower effective foreign tax rates	(5)	(36)	(63)
Tax rate and legislative changes	–	–	(30)
Income from equity investments and non-controlling interests	(45)	(40)	(37)
Other	(24)	(47)	(62)
Actual Income Tax Expense	573	380	387

Future Income Tax Assets and Liabilities

December 31 (millions of dollars)	2011	2010
Future Income Tax Assets
Operating loss carryforwards	905	494
Financial instruments	163	108
Other post-employment benefits	74	75
Deferred amounts	49	42
Other	141	153
	1,332	872
Future Income Tax Liabilities
Difference in accounting and tax bases of plant, equipment and PPAs	4,164	3,439
Taxes on future revenue requirement	299	321
Unrealized foreign exchange gains on long-term debt	133	161
Pension benefits	94	96
Other	107	77
	4,797	4,094
Net Future Income Tax Liabilities	3,465	3,222

The above future tax amounts have been classified in the Consolidated Balance Sheet as follows:

December 31 (millions of dollars)	2011	2010⁽¹⁾
Future Income Tax Assets
Other current assets	265	93
Intangibles and other assets (Note 9)	133	112
	398	205
Future Income Tax Liabilities
Accounts payable	75	29
Future income taxes	3,788	3,398
	3,863	3,427
Net Future Income Tax Liabilities	3,465	3,222

⁽¹⁾	Amounts relating to deferred tax assets and liabilities as at December 31, 2010 have been reclassified to conform with current year's presentation.

At December 31, 2011, the Company has recognized the benefit of unused non-capital loss carryforwards of $450 million (2010 – $42 million) for federal and provincial purposes in Canada, which expire from 2014 to 2031.

At December 31, 2011, the Company has recognized the benefit of unused net operating loss carryforwards of US$2,119 million (2010 – US$1,320 million) for federal purposes in the U.S., which expire from 2028 to 2031.

Unremitted Earnings of Foreign Investments

Income taxes have not been provided on the unremitted earnings of foreign investments that the Company does not intend to repatriate in the foreseeable future. Future income tax liabilities would have increased at December 31, 2011 by approximately $136 million (2010 – $105 million) if there had been a provision for these taxes.

Income Tax Payments

Income tax refunds of $84 million, net of payments made, were received in 2011 (2010 – payments, net of refunds, of $53 million; 2009 – payments, net of refunds, of $83 million).