What gets added back
ATI starts with taxable income, then reverses the main ways people legitimately lower it. The add-backs are:
- Reportable fringe benefits: the fringe benefits amounts shown on your income statement. The reportable fringe benefits entry covers how that figure is built.
- Reportable super contributions: salary-sacrificed super and personal deductible contributions. Compulsory employer super is not added back.
- Net investment losses: the shortfall on negatively geared property and investments, added back on top of the taxable income it reduced.
- Certain tax-exempt foreign employment income, and for some tests, adjustments for child support paid.
The design logic is blunt: two people on the same package should face the same income test, whether one of them packages a car and sacrifices into super or takes it all as salary.
Where ATI is used
ATI, or a close variant of it, sits behind most of the income tests that matter to a wage earner. HELP repayment income is taxable income plus the same core add-backs, and it decides your compulsory study loan repayment under the HECS repayment rates. Income for Medicare levy surcharge purposes works the same way, setting whether the surcharge applies on top of the levy covered in the Medicare levy guide. Family Tax Benefit, child care subsidy and a run of other payments and offsets all test ATI too.
Example: reportable super lifting a HELP repayment
A resident with a taxable income of $95,000 salary-sacrifices $10,000 into super. Taxable income falls, but the sacrificed amount is a reportable super contribution, so repayment income for the study loan test counts it anyway. On the 2026-27 HELP scale (repayments start above $69,528), the compulsory repayment on $95,000 of repayment income is $3,821. On $105,000 it is $5,321. The sacrifice adds $1,500 to the year's compulsory repayment even though it cut the income tax bill. Salary packaging with a HELP debt has to be weighed against exactly this effect.
ATI vs taxable income
Your tax bill is still calculated on taxable income; ATI never changes the income tax itself. It only changes eligibility and liability under the tests that reference it. That is why a packaging arrangement can lower your tax and simultaneously raise your HELP repayment or trip the Medicare levy surcharge: two different income definitions are at work on the same payslip. Related terms, including taxable income itself, are defined in the glossary.
Sources
- ATO: Income tests (the adjusted taxable income components)
- ATO: Study and training support loans rates and repayment thresholds
Narelle Hartigan is a CPA-qualified tax accountant with over a decade of experience in Australian personal taxation and payroll. She founded PAYG Calculator Australia to make tax withholding easy for every Australian worker to understand.