CAPITAL POWER CORPORATION Notes to the Consolidated Financial Statements (Tabular amounts in millions of Canadian dollars, except share and per share amounts) 5. Finance expense: 6. Income tax: Income taxes differ from the amount that would be computed by applying the federal and provincial income tax rates as follows: 2012 2011 Income before tax $ 86 $ 188 Income tax at the statutory rates of 25.0% and 26.5% respectively 22 50 Increase (decrease) resulting from Amounts attributable to non-controlling interests (12) (28) Amounts relating to gains on acquisitions and disposals 5 (16) Amounts previously not recognized on investments in subsidiaries - (5) Change in unrecognized tax benefits (7) (2) Non-deductible amounts 5 - Prior period tax adjustments 2 1 Statutory and other rate differences (20) - Other 1 - Income tax recovery $ (4) $ - 2012 2011 Current income tax Current income tax expense $ 4 $ 5 Deferred income tax Relating to previously unrecognized temporary differences - (5) Relating to origination and reversal of temporary differences 17 1 Relating to prior periods 2 1 Relating to tax rate differences (20) - Relating to write-downs of deferred tax assets (7) (2) Total deferred income tax recovery (8) (5) Income tax recovery $ (4) $ - 2012 2011 Interest expense: Interest on borrowings $ 87 $ 114 Capitalized interest (23) (36) Total interest expense 64 78 Other finance expense: (Gain) loss on financial instruments (note 14) (1) 14 Unwinding of the discount on decommissioning provisions (note 23) 4 5 Other 8 8 Finance expense $ 75 $ 105 95