2022-23 SGI CANADA Annual Report

18 Income taxes The Corporation's out-of-province legal entities, SCISL and Coachman, are subject to corporate income tax, while SGI CANADA is not. On a consolidated basis, the Corporation recorded an income tax recovery of $6.4 million in 2023 compared to an income tax expense of $2.8 million in 2022. The variance relates to the decreased profitability in jurisdictions outside of Saskatchewan this year. Excluding Saskatchewan operations, which are non-taxable, this results in a tax rate of 25.3% (compared to 25.6% in 2022). Investment earnings (thousands of $) 2023 2022 Change 42,476 32,316 10,160 Net investment earnings For the year, investment earnings were $42.5 million and represented 3.6% of total revenues (2022 - $32.3 million or 3.0% of total revenues). The components of investment earnings are disclosed in note 14 to the consolidated financial statements, and include interest, dividends, investment fund distributions, realized gains and losses on sales of investments, and unrealized gains and losses on the change in market value of investments. For purposes of portfolio management, market-based returns are calculated by capturing all interest, dividends and investment fund distributions, as well as the impact of the change in market value of investments, both realized and unrealized. While these returns are compared to the benchmark returns on a quarterly basis, the performance measures are expected to be met over four years, a long enough period to capture a full market cycle. This long-term measure is appropriate as it recognizes that the effectiveness of investment management styles varies depending on the market environment. Performance relative to the benchmark portfolio varies from year-to-year but, as illustrated in the following graph, over rolling four-year periods investment performance remains satisfactory with all periods exceeding the benchmark in the last eight four-year periods. Four-Year Market-Based Returns to March 31 8% 6% 4% 2% 5.1% 4.4% 5.6% 4.6% 4.7% 3.4% 3.8% 2.8% 3.9% 3.1% 5.2% 4.1% 4.7% 3.7% 4.0% 2.9% 2016 2017 2018 2019 SGI CANADA 2020 Benchmark Portfolio 2021 2022 2023 2022-23 SGI CANADA Annual Report

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