WINDSOR CANADA UTILITIES LTD.

Year ended December 31, 2019

16. Income taxes (provision for payment in lieu of corporate taxes) (continued):

The provision for income taxes varies from amounts which would be computed by applying the

Corporation’s combined statutory income tax rate as follows:

	2019	2018
Basic rate applied to total comprehensive income
before income tax	26.50%	26.50%
Change in income tax resulting from:
Items not deductible for tax purposes and other	(3.64%)	(0.09%)
Effective rate applied to comprehensive
income before income taxes	22.86%	26.41%

The components of the deferred income tax assets and liabilities are summarized as follows:

Deferred tax assets:		2019		2018
Employee benefits	$ 10,368		$ 10,747
Property, plant and equipment	16		9
Regulatory assets	885		428
Other	257		250
Deferred tax liabilities:
Property, plant and equipment		(1,709)		(4,824)
Other		(75)		(100)
Net deferred income tax asset	$	9,742	$	6,510

At December 31, 2019, a deferred tax asset of $9,742 (2018 - $6,510) has been recorded. The utilization of this tax asset is dependent on future taxable income in excess of income arising from the reversal of existing taxable temporary differences. The Corporation believes that this asset should be recognized as it will be recovered through future rates.