The End of Add Backs in Family Law: What This Means for Your Property Settlement Case

The End of Add Backs in Family Law: What This Means for Your Property Settlement Case

If you’re going through a property settlement after separation, you might want to pay close attention — because a major shift in Australian family law has just changed the way property pools are calculated. The long-standing rule around “add backs” has been overturned, and that could significantly impact the outcome of your case.

In the recent case of Shinohara & Shinohara (No 2) [2025] FedCFamC1F, the Full Court of the Federal Circuit and Family Court of Australia clarified that under the June 2025 amendments to the Family Law Act 1975, courts can no longer “add back” property or funds that no longer exist at the time of trial. In other words, if an asset has been sold or spent, it won’t be treated as though it’s still there. That’s a huge departure from how property settlements have been handled for decades.

Let’s break down what this means, why it matters, and how you can prepare if you’re currently navigating a property settlement Sydney or anywhere else in Australia.

What Are ‘Add Backs’ and Why Were They So Important?

For years, “add backs” allowed the court to treat certain property or money — even if it no longer existed — as part of the asset pool for division. The idea was simple: if one party had spent or disposed of assets unfairly, the court could notionally “add back” that value to ensure fairness.

Think about scenarios where one spouse used marital funds to pay their own legal fees, went on a lavish trip, or gave away money during separation. Under the old rules, the court could act as though that money was still available and divide it accordingly. This method ensured neither party could benefit from spending shared assets before a settlement was reached.

However, Shinohara & Shinohara changed all that — and the ripple effects are being felt across family law cases nationwide.

The Shinohara Case: What Happened?

In Shinohara, both the husband and wife had sold several properties, including units in different suburbs and their former family home. The funds from those sales were largely used to pay legal costs and other personal expenses. Early in their case, they even agreed to “add back” about $592,000 to their asset pool.

But by the time the case went to trial, the judge decided not to include these notional amounts. Instead, only the existing assets — such as money held in trust, vehicles, an e-bike, and a few shares — were considered.

On appeal, the wife argued this was unfair, saying both parties had already agreed to include the add backs. The husband, meanwhile, maintained that the law still allowed it despite the new amendments.

When the Full Court reviewed the case, it made one thing clear: the law now only allows the court to divide existing property and financial interests. Anything that has already been sold, spent, or lost cannot be artificially added back into the pool.

How the New Law Interprets Add Backs

The Court based its decision on section 79 of the Family Law Act 1975, which, after the June 2025 update, now states that only “existing legal and equitable rights and interests” can form part of the property pool at trial.

So, what does that mean for you? Essentially, if an asset or money no longer exists — because it’s been spent or transferred — it cannot be included as notional property. The judge’s discretion to “add back” that value is gone.

But here’s the key takeaway: while add backs no longer exist as a direct mechanism, their underlying issues haven’t disappeared completely. Courts can still consider how those transactions affect the overall fairness of your case — just under different sections of the Act.

Under section 79(4), the court can assess how the use of those funds contributes to each person’s role in the relationship. Meanwhile, section 79(5) allows judges to consider how these actions impact each party’s current and future needs.

Why This Change Matters for Property Settlements

At first glance, this shift may seem technical — but it has very real consequences for separating couples.

If your ex-partner has spent or sold assets before trial, that value will no longer be counted in the divisible pool. That means the pool could look much smaller, leaving less to divide between you.

The focus now shifts from adding back lost property to demonstrating why and how that spending affects your contributions or future financial needs. It also makes clear and detailed evidence more important than ever.

Let’s take an example. Suppose your ex sold the family home and used their share on an extended overseas holiday. You can’t ask the court to “add back” the cost of that trip. However, you can argue that the money’s disappearance shows they’ve already benefited disproportionately — meaning you should receive a greater share of what remains.

In another scenario, imagine your ex withdrew large sums from a joint account to pay their legal fees. That amount can’t be reintroduced into the pool, but it can still influence how the court evaluates your respective financial contributions and future needs.

In short, while you’ve lost the add back tool, you’ve gained a more nuanced approach that still accounts for fairness — just through a different lens.

How This Affects Property Disputes Across Australia

The Shinohara decision marks the end of the “notional property” era in Australian family law. It fundamentally changes how property settlements are argued and calculated.

Previously, lawyers could rely on add backs to keep both parties accountable for how they handled assets after separation. Now, your legal team must shift strategies — focusing on contribution histories, financial conduct, and the ongoing impact of asset use.

If you’re going through a settlement, it’s essential to document every transaction clearly. Keep bank statements, receipts, and communication records showing how property was sold or spent. These details can help your lawyer build a compelling case under the new framework.

A Closer Look at Legal Strategy Moving Forward

So, where does this leave you? The main challenge now lies in presenting a comprehensive narrative that reflects your contributions and needs in light of how assets were used.

Lawyers will now focus less on “adding back” lost property and more on demonstrating the consequences of asset use. For example, if one party dissipated funds recklessly, the court might find that their financial contribution was reduced or that your needs should be given greater weight in the final division.

Documentation will be your greatest ally. The more clearly you can show what happened to shared funds, the stronger your case becomes. This is also where professional legal guidance is invaluable — navigating the new law requires precision, timing, and experience.

If you’re in Queensland and need local support, MK Law Brisbane offers expert advice on how these legal updates could affect your settlement. They can help you present your evidence effectively, adapt your strategy, and protect your share of the property pool.

Final Thoughts: Navigating the New Rules with Confidence

The end of add backs doesn’t mean you’re powerless to challenge unfair financial conduct — it simply means the rules of the game have changed. Courts will still consider how assets were used, but they’ll now do it through the lens of contributions and needs rather than notional accounting.

If you’re currently involved in a property dispute or expect one soon, don’t wait to update your strategy. The earlier you get tailored advice, the better your chances of securing a fair outcome.

By understanding how these reforms affect your situation — and by working with lawyers who stay on top of legal changes — you can approach your settlement with clarity and confidence. Whether you’re seeking guidance from specialists in property settlement Sydney or relying on the expertise of MK Law Brisbane, the key is preparation.

Property settlements are about more than dividing assets; they’re about ensuring fairness after a major life change. And with the new laws in play, having the right legal team by your side has never been more important.

Author Bio: Jeryl Damluan is a seasoned SEO Specialist and Outreach Specialist at Justice Network. She excels in building authority links and amplifying online presence for law firms and businesses through strategic content creation and digital marketing.