Recent amendments to the Family Law Act 1975 have brought significant changes to how property settlements are determined in Australia. Notably, the practice of ‘add backs’—where assets dissipated before trial were notionally added back into the property pool—has been abolished. This shift has profound implications for separating couples and their legal advisors.

What Were ‘Add Backs’?

Traditionally, ‘add backs’ allowed the court to include assets that one party had spent or disposed of before the trial in the property pool. This practice aimed to prevent unfair depletion of assets and ensure an equitable division. Common scenarios where add backs were applied include:

• Legal Fees: Funds used to pay for legal representation.
• Premature Property Distribution: Assets distributed before the trial.
• Wastage: Assets spent recklessly or negligently.

These add backs were often treated as ‘phantom’ assets, reintroduced into the property pool to ensure fairness.

The 2025 Amendments: A New Legal Landscape

On 10 June 2025, the Family Law Amendment Act 2024 came into effect, introducing significant changes to Section 79 of the Family Law Act 1975. The key amendment stipulates that the court must identify only the “existing legal and equitable rights and interests” in property at the time of trial. This means that only assets physically or legally present at the time of the hearing can be considered in the property pool. Consequently, the practice of adding back dissipated assets has been formally abolished.

The Shinohara Case: A Landmark Decision

The Full Court of the Federal Circuit and Family Court of Australia addressed this issue in the case of Shinohara & Shinohara [2025] FedCFamC1A 126. In this case, the parties had agreed to include add backs totaling approximately $592,768 in their property settlement. 

The Shinohara Case: A Turning Point

The landmark decision in Shinohara & Shinohara [2025] FedCFamC1A 126 marked a pivotal moment in family law. The Full Court of the Federal Circuit and Family Court of Australia ruled that ‘add-backs’ are no longer permissible in property settlements. This decision aligns with the 2025 amendments to the Family Law Act, which aim to provide clearer and more equitable guidelines for property division.

However, the trial judge excluded these add backs, limiting the asset pool to the remaining property. On appeal, the court upheld this decision, emphasizing that the recent amendments to Section 79 mandated the exclusion of non-existent assets from the property pool. Instead, the court considered the dissipation of assets under Sections 79(4) and 79(5), which pertain to contributions and future needs, respectively.

Implications for Property Settlements

1. Focus on Existing Assets

With the abolition of add backs, the property pool now reflects a snapshot of assets at the time of trial. This change simplifies the process and reduces disputes over notional figures.

2. Consideration of Dissipated Assets

While dissipated assets are no longer added back into the property pool, their impact can still be considered under Sections 79(4) and 79(5). Section 79(4) addresses contributions, including financial and non-financial contributions, while Section 79(5) allows adjustments based on future needs and the effect of dissipation.

3. Importance of Financial Conduct

The way assets are managed during separation now carries more weight. Reckless or wasteful spending can influence the court’s assessment of contributions and future needs, potentially affecting the final property division.

4. Enhanced Role of Legal Advice

Given these changes, seeking advice from experienced divorce and property settlement lawyers in Brisbane is crucial. They can guide you through the complexities of the new legal framework and help protect your interests.

Practical Steps for Separating Couples

• Maintain Detailed Records: Keep comprehensive records of all financial transactions, including bank statements, receipts, and documentation of asset disposals.
• Seek Legal Advice Early: Engage with divorce and property settlement lawyers in Brisbane promptly to understand your rights and obligations.
• Focus on Contributions and Needs: Prepare to discuss both financial and non-financial contributions, as well as future needs, in your property settlement negotiations.
• The abolition of add backs marks a significant shift in Australian family law, emphasizing the division of existing assets and a more nuanced approach to assessing fairness. For separating couples, understanding these changes and seeking expert legal advice is essential to navigate the new landscape effectively. Divorce and property settlement lawyers in Brisbane are well-equipped to assist you in achieving a just and equitable property settlement under the revised legal framework.

How This Affects You

For individuals undergoing a divorce or separation, understanding these changes is crucial. The elimination of ‘add-backs’ means that the court’s focus will shift more towards assessing the actual assets available and the contributions and needs of each party. This change aims to promote fairness and transparency in property settlements.

The abolition of ‘add-backs’ marks a significant shift in Australian family law, aiming to create a more equitable framework for property settlements. Understanding these changes and their implications is essential for anyone going through a divorce or separation. Engaging with experienced divorce and property settlement lawyers in Brisbane can provide the support and expertise needed to navigate this new legal landscape effectively.