In times of global economic uncertainty and in a climate of increased consumer responsibility for financial decisions, maintaining a financial environment where consumers are protected from risk and continue to have opportunities to create wealth should be critical for governments, business and administrators. The Australian Government has recognised that, for those with the lowest levels of financial literacy, specific financial literacy programs can equip them with the appropriate financial skills and knowledge to ensure they can make well informed decisions and be less vulnerable to scams and market risks.

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 them from financial risk. It is argued that taxation consequences often play an important role in investment decisions and are often the primary reason why people seek assistance and advice from professionals. It is also argued that making poor taxation decisions through a lack of basic understanding can pose significant risks to a person's overall financial position and financial decision-making. Indeed, Chardon has argued that the notion of financial capability should include notions of tax and superannuation. Ho we ver to what extent do Australians understand basic tax concepts, that is - what is their "tax literacy"?

The current study is the first to empirically examine the tax literacy of Australians and whether there are any correlations with certain demographical factors. The study involved firstly a series of focus group interviews to determine what concepts should form part of a tax literacy score (TLS). This was then followed by a survey completed by over 600 Australians to determine their TLS. In measuring the levels of tax literacy in Australia, it was found that approximately 81% of Australians have a TLS at the "basic" or higher level. This, in turn, means that 19% of Australians have a TLS classified as either "poor" or "low' Also, it was found that similar demographic groups for financial literacy were likely to have lower levels of tax literacy. It was also found that higher levels of tax literacy were found in those groups having a greater connection to employment The findings of this research have practical policy implications, in that the results can assist policymakers and administrators in their understanding of what areas of tax the general population needs assistance with and can help shape communication and education strategies.