v3.25.4
Income taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income taxes Income taxes
In 2025, the company adopted the Financial Accounting Standards Board’s ASU No. 2023‑09, Improvements to Income Tax Disclosures on a retrospective basis in accordance with the transition provision.

millions of Canadian dollars2025 2024 2023 
Current income tax expense (benefit)
1,125 1,586 1,556 
Deferred income tax expense (benefit)
(131)(137)(76)
Total income tax expense (benefit)
994 1,449 1,480 
Federal625 902 920 
Provincial369 547 560 
Total income tax expense (benefit)994 1,449 1,480 
Income (loss) before income taxes4,262 6,239 6,369 
Canadian federal statutory tax rate639 15.0%935 15.0%955 15.0%
Provincial (a)
376 8.8%567 9.1%582 9.1%
Increase (decrease) resulting from:
Other(21)(0.5%)(53)(0.9%)(57)(0.9%)
Effective income tax rate994 23.3%1,449 23.2%1,480 23.2%
(a)Provincial taxes in Alberta make up the majority (50 percent or more).
Deferred income taxes are based on differences between the accounting and tax values of assets and liabilities. These differences in value are re-measured at each year-end using the tax rates and tax laws expected to apply when those differences are realized or settled in the future. Components of deferred income tax liabilities and assets as at December 31 were:

millions of Canadian dollars2025 2024 2023 
Depreciation and amortization5,311 5,267 5,366 
Successful drilling and land acquisitions236 236 237 
Pension and benefits38 (15)(168)
Asset retirement obligation(858)(686)(655)
Capitalized interest202 185 155 
LIFO inventory valuation(297)(468)(406)
Tax loss carryforwards(65)(66)(69)
Valuation allowance65 66 69 
Other(214)(35)(60)
Net deferred income tax liabilities4,418 4,484 4,469 

The following table summarizes total income taxes (paid) refunded:

millions of Canadian dollars2025 2024 2023 
Federal(901)(1,119)(2,562)
Provincial
Alberta(342)(380)(1,048)
Ontario(131)(176)(343)
Other(61)(96)(200)
Total income taxes (paid) refunded(1,435)(1,771)(4,153)
Unrecognized tax benefits
Unrecognized tax benefits reflect the difference between positions taken or expected to be taken on income tax returns and the amounts recognized in the financial statements.
The following table summarizes the movement in unrecognized tax benefits:

millions of Canadian dollars2025 2024 2023 
Balance as of January 134 47 60 
Additions based on current year’s tax position6 2 7 
Additions for prior years’ tax positions3 — — 
Settlements with tax authorities(1)(15)(20)
Balance as of December 3142 34 47 
The unrecognized tax benefit balances shown above predominantly relate to tax positions that would reduce the company’s effective tax rate if the positions are favourably resolved. Unfavourable resolution of these tax positions generally would not increase the effective tax rate. The 2025, 2024 and 2023 changes in unrecognized tax benefits did not have a material effect on the company’s net income or cash flow. The company’s tax filings from 2020 to 2025 are subject to examination by the tax authorities. Tax filings from 2009 to 2024 have open objections and therefore are also subject to examination by the tax authorities. The Canada Revenue Agency has made certain adjustments to the company’s filings. Management has evaluated these adjustments and is formally disputing those matters to which the company disagrees. The impact on unrecognized tax benefits and the company’s effective income tax rate from these matters is not expected to be material.
Resolution of the related tax positions could take many years to complete. It is difficult to predict the timing of resolution for tax positions since such timing is not entirely within the control of the company.
The company classifies interest on income tax related balances as interest expense or interest income and classifies tax related penalties as operating expense.
Unrecognized tax benefits are not classified as future commitments because the company does not expect there will be any cash impact from the final settlements as sufficient funds have been deposited with the Canada Revenue Agency.