Tax and Superannuation Literacy: Australian and New Zealand Perspectives

(2016) 22(4) New Zealand Journal of Taxation Law and Policy 327-345

19 Pages Posted: 8 Feb 2017

See all articles by Toni Chardon

Toni Chardon

University of Southern Queensland

Mark Brimble

Griffith University - School of Accounting, Banking and Finance - Nathan and Logan Campuses; Centre for Financial Independence and Education

Brett Freudenberg

Griffith University - Griffith Business School; Griffith University - Griffith Law School

Date Written: December 29, 2016

Abstract

The Australian and New Zealand governments both recognise the economic and social importance of building a financially capable population. In Australia this is recognised through the National Financial Literacy Strategy and in New Zealand through the National Strategy for Financial Capability. Both strategies define financial literacy (or capability) as the ability to make informed judgements and effective decisions regarding the use and management of money. One of the main aims of increasing the overall financial literacy of populations is creating an environment where consumers have the knowledge, skills and confidence to protect themselves from financial risk. It is argued that taxation consequences often play an important role in investment decisions and are also a major reason why people seek assistance and advice from professionals. Australian research has found that there are basic concepts of tax and superannuation that are important in the context of overall financial literacy and that there are specific aspects that potentially affect financial decision making which are poorly understood.

There are a number of fundamental differences in tax and retirement policy between Australia and New Zealand, including that New Zealanders with only salary and wage income are not required to lodge a tax return, that the main superannuation scheme (KiwiSaver) is optional, and that there is broadly no capital gains tax. However, in the context of financial decision making, there are also a number of similarities, particularly in relation to the availability of particular tax concessions for families, those with children, on lower incomes and also in relation to Government provisions for retirement. Much like Australian research, financial capability measures in New Zealand have previously found there may be gaps in the understanding of particular aspects of superannuation but that the targeted approach to building capability appears to be increasing this understanding, particularly in relation to New Zealand superannuation.

This article will explore the extent to which tax and superannuation literacy are considered important in the context of the New Zealand National Strategy for Financial Capability and the extent to which aspects of tax and superannuation have been measured as part of previous financial capability research. Using recent Australian measures of financial and tax literacy research as comparisons, it will be argued that irrespective of differences in tax policy between the two countries, having an understanding of basic tax and superannuation concepts is important in terms of building overall financial capability of citizens in both countries.

Keywords: Financial Literacy, Tax Literacy, Financial Capability, Confidence

JEL Classification: K34, H21, I22

Suggested Citation

Chardon, Toni and Brimble, Mark and Freudenberg, Brett, Tax and Superannuation Literacy: Australian and New Zealand Perspectives (December 29, 2016). (2016) 22(4) New Zealand Journal of Taxation Law and Policy 327-345. Available at SSRN: https://ssrn.com/abstract=2907828

Toni Chardon (Contact Author)

University of Southern Queensland ( email )

P.O.Box 238 Darling Heights
Toowoomba, Queensland 4350
Australia

Mark Brimble

Griffith University - School of Accounting, Banking and Finance - Nathan and Logan Campuses ( email )

University Drive
Logan, Queensland 4131
Australia
(07) 373 55311 (Phone)

Centre for Financial Independence and Education ( email )

Brisbane, Queensland 4111
Australia

Brett Freudenberg

Griffith University - Griffith Business School ( email )

Brisbane, Queensland 4111
Australia

Griffith University - Griffith Law School ( email )

Nathan Campus, GU
Nathan 4111
Australia

Register to save articles to
your library

Register

Paper statistics

Downloads
56
Abstract Views
879
rank
375,384
PlumX Metrics