This strategy involves employees with large employment income salary sacrificing part of their wages into excess concessional super contributions. 

The tax consequences of this are:

  • The employer receives a tax deduction for the total super contributions made.
  • The excess super contributions are included in the employees individual assessable income and taxed at marginal rates. The individual is entitled to a 15% ECC tax offset.
  • The super fund is taxed 15% on the employer contributions.

The advantages of this strategy are:

  • Enables high income earning employees to pump extra funds into their super fund.
  • Tax savings result when the super fund has tax losses due to negative gearing. This can result in the fund paying no tax on the employer super contributions received so saving 15% tax.