Criteria(a) Equity ownership approach Tax statistics Implied market value studies applicable, reflective of economic and finance principles and market information. - Estimation methods and financial models are consistent with well accepted economic and finance principles and informed by sound empirical analysis and robust data. Accords with Monkhouse framework and principle of investor rationality (e.g. eligible investors expected to utilise credits to they are entitled). Analysis is straightforward and sound. Data is from credible source (ABS). Market information on the amount of imputation credits utilised. Analysis is straightforward and sound. Data is from credible source (ATO), but some data concerns have been identified. Mainly based on the principle that share prices reflect the present value of future dividends (and imputation credits) and 'no arbitrage'. Varying opinions on the soundness of analysis across studies. Underlying data is typically from credible sources (e.g. Bloomberg, ASX). Fit for purpose. - The use of estimation methods, financial models, market data and other evidence should be consistent with the original purpose for which it was compiled and have regard to the limitations of that purpose. - Promote simple over complex approaches where appropriate. ABS data used to estimate the domestic ownership share of Australian equity, which is consistent with its purpose. Approach is simple. ATO statistics used to observe the reported amount of imputation credits utilised by investors, which is consistent with their purpose. Approach is simple. Some studies undertaken for the specific purpose of estimating the utilisation rate for regulatory purposes. Results of some studies need to be interpreted carefully to be consistent with the regulatory framework. Studies can employ complex and sometimes problematic estimation methodologies. Implemented in accordance with good practice. - Supported by robust, transparent and replicable analysis that is derived from available credible datasets. Transparent and replicable published data. Some knowledge of ABS classifications required. Transparent and replicable using published data, although detailed knowledge of tax return labels required. Some data concerns have been identified. Less transparent and replicable, as econometrics knowledge required and data not always publicly or freely available.
Where market data and other information is used, this information is: credible and verifiable; comparable and timely; and clearly sourced. ABS is a credible source. Relevant statistics are published online on a quarterly basis. ATO is a credible source. Relevant statistics are published online on an annual basis, with a two-year lag (e.g. 2011–12 statistics published in 2014). Some data concerns have been identified. Underlying data typically from credible sources (e.g. Bloomberg, ASX) and is produced on a timely basis. Data not always publicly or freely available. Use of econometrics makes the results difficult and complex to verify. Sufficiently flexible as to allow changing market conditions and new information to be reflected in regulatory outcomes, as appropriate. Reflects current ownership of Australian equities. However, not reflect any tax law changes that reduce eligible investors’ utilisation rates below 1. Reflects conditions up to two ago. Reflects current conditions to the extent that recent data is used. Different studies span various time periods. Table 415 Application of rate of return criteria to evidence on the utilisation rate Source: AER analysis. (a): The criteria relating specifically to return on equity and return on debt quantitative models are excluded because they are not applicable.