2022-23 SGI CANADA Annual Report
Income taxes
The Corporation uses the asset and liability method of accounting for income taxes. Income taxes are comprised of
both current and deferred taxes. Income taxes are recognized in the Consolidated Statement of Operations.
Current income taxes are recognized as estimated income taxes for the current year. Deferred income tax assets
and liabilities consist of temporary differences between tax and accounting basis of assets and liabilities, as well as
the benefit of losses available to be carried forward to future years for tax purposes that are likely to be realized. The
effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes
the date of enactment or substantive enactment. A valuation allowance is recorded against any deferred income tax
asset if it is probable that the asset will not be realized, probable being defined as more likely than not.
Employees' future benefits
The Corporation provides a defined contribution pension plan, a defined benefit pension plan and defined benefit
service recognition plans that provide retirement benefits for employees.
For the defined contribution pension plan, the Corporation's obligations are limited to contributions made for
current service. When made, these contributions are charged to income.
The Corporation's defined benefit pension plan is available to certain of its employees and has been closed to new
membership since 1980. The plan provides a full pension at retirement calculated as 2% of a member's average
earnings during the five years of highest earnings, multiplied by the total number of years of service to a maximum
of 35 years. The plan may be indexed at the discretion of the Board of Directors. The plan is pre-funded by payments
from employee and employer contributions that are made to a separately administered fund and are determined by
periodic actuarial calculations taking into account the recommendations of a qualified actuary.
Responsibility for governance of the plan lies with the Corporation. The Corporation has appointed an administrator
to assist with the management of the plan and experienced, independent professional experts such as investment
managers, an actuary and a custodian.
Plan assets consist primarily of fixed income and equity funds and are carried at fair value. Plan assets are not
available to creditors of the Corporation nor can they be paid directly to the Corporation.
For the defined benefit plan:
(i) Net interest on the accrued pension liability is recognized in net income.
(ii) Pension obligations are determined by an independent actuary using the projected unit credit method prorated
on service, and management's best estimate assumptions of expected plan investment performance, salary
escalation, age at retirement, mortality of members and future pension indexing, based upon the consumer
price index.
(iii) The discount rate used to determine the accrued benefit obligation and the expected return on plan assets was
determined by reference to market interest rates at the measurement date of high-quality debt instruments that
are denominated in the currency in which the benefits will be paid, with cash flows that match the timing and
amount of expected benefit payments.
(iv) Past service costs are expensed immediately.
(V) Actuarial gains and losses are recognized in OCI in the period in which they arise.
The accrued benefit asset (liability) is the fair value of plan assets out of which the obligation is to be settled directly,
less the present value of the defined benefit obligation. It is restricted to the present value of economic benefits
available in the form of refunds from the plan or reductions in future contributions to the plan.
2022-23 SGI CANADA Annual Report 45View entire presentation