IMPERIAL OIL LTDIMO
IMPERIAL OIL LTD Income Taxes Disclosure
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 dollars | 2025 | 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 | |||||||||||||||||
| Federal | 625 | 902 | 920 | |||||||||||||||||
| Provincial | 369 | 547 | 560 | |||||||||||||||||
| Total income tax expense (benefit) | 994 | 1,449 | 1,480 | |||||||||||||||||
| Income (loss) before income taxes | 4,262 | 6,239 | 6,369 | |||||||||||||||||
| Canadian federal statutory tax rate | 639 | 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 rate | 994 | 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 dollars | 2025 | 2024 | 2023 | ||||||||
| Depreciation and amortization | 5,311 | 5,267 | 5,366 | ||||||||
| Successful drilling and land acquisitions | 236 | 236 | 237 | ||||||||
| Pension and benefits | 38 | (15) | (168) | ||||||||
| Asset retirement obligation | (858) | (686) | (655) | ||||||||
| Capitalized interest | 202 | 185 | 155 | ||||||||
| LIFO inventory valuation | (297) | (468) | (406) | ||||||||
| Tax loss carryforwards | (65) | (66) | (69) | ||||||||
| Valuation allowance | 65 | 66 | 69 | ||||||||
| Other | (214) | (35) | (60) | ||||||||
| Net deferred income tax liabilities | 4,418 | 4,484 | 4,469 | ||||||||
The following table summarizes total income taxes (paid) refunded:
| millions of Canadian dollars | 2025 | 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 dollars | 2025 | 2024 | 2023 | ||||||||
| Balance as of January 1 | 34 | 47 | 60 | ||||||||
| Additions based on current year’s tax position | 6 | 2 | 7 | ||||||||
| Additions for prior years’ tax positions | 3 | — | — | ||||||||
| Settlements with tax authorities | (1) | (15) | (20) | ||||||||
| Balance as of December 31 | 42 | 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.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 18, 2026 | Showing above |
| 2024 | Feb 19, 2025 | |
| 2023 | Feb 28, 2024 | |
| 2022 | Feb 22, 2023 | |
| 2021 | Feb 23, 2022 | |
| 2020 | Feb 24, 2021 | |
| 2019 | Feb 26, 2020 | |
| 2018 | Feb 27, 2019 | |
| 2017 | Mar 1, 2018 | |
| 2016 | Feb 23, 2017 | |
| 2015 | Feb 24, 2016 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.