Big Changes to ‘Add Backs’ in Property Settlements – What It Means for You

If you’re going through a property settlement after separation, a recent court decision could change the way your property pool is worked out. The rules around “add backs” have shifted — and that might affect the outcome of your case.

In Shinohara & Shinohara (No 2) [2025] FedCFamC1F, the Full Court of the Federal Circuit and Family Court of Australia (Division 1) made it clear: after the June 2025 changes to the Family Law Act 1975, you can no longer add back property or funds that don’t exist at the time of trial. This is a big change to how property settlements have been handled for decades.

What are ‘Add Backs’ and Why Do They Matter?

In the past, if one person had sold, spent, or used property before the case went to trial, the Court could treat that property as if it was still there. This was called an “add back.”

For example:

• If your ex sold a property and used the money for legal fees
• If they withdrew and spent large sums during separation
• If they disposed of assets in a way the Court considered “wasteful”

The value of those assets could be added back into the property pool and then divided. This often changed the final settlement figures in a significant way.

What Happened in the Shinohara Case?

In the Shinohara case, the parties had sold:

• The husband’s Suburb EE unit
• The wife’s Suburb FF unit
• Their joint Suburb BB home

The money from these sales was mostly spent on legal fees and other expenses. Early in the process, both parties agreed to add back about $592,768 to the balance sheet. But at trial, the judge decided not to include these add backs and only counted assets that still existed: money held in trust, vehicles, an e-bike, and a small shareholding.

On appeal:

• The mother argued it was unfair because she assumed the agreed add backs were included.
• The father argued that the law still allowed for add backs, even after the 2025 amendments.

What the Court Said

The Court looked closely at the 10 June 2025 amendments to section 79 of the Family Law Act 1975. It found that:

• The law now says the Court can only identify “existing legal and equitable rights and interests” in property at trial.
• This means property that no longer exists cannot be part of the asset pool.
• There is no leftover discretion in s 79 to add back notional amounts.

However, that doesn’t mean the issue is irrelevant. The Court confirmed that the old “categories” of add backs — like legal fees, premature distribution, and waste — can still be considered, but in a different way:

• Section 79(4): Look at how those assets were used as part of each person’s contribution history.
• Section 79(5): Consider their impact on current and future needs (e.g., if one party is left in a weaker financial position because of it).

Why This Change Matters for You

This change could have a big impact on your property settlement:

1. The pool may be smaller – If property has been sold or spent, it won’t be “added back” for division. This could mean there’s less to share.
2. Your case strategy will change – Instead of arguing to add back amounts, your lawyer will need to show how those transactions affect your contributions or needs.
3. Evidence is now even more important – You’ll need to prove where the money went and why it should matter in your final settlement.

Example Scenarios

• Example 1: You and your ex sell the family home, and they spend their share on an overseas holiday. You can’t add that holiday cost back into the pool, but you may be able to argue under s 79(4) and (5) that it reduces their contributions or means you need a greater share of the remaining property.
• Example 2: Your ex withdraws funds from a joint account and pays their legal fees. You can’t add that back into the balance sheet, but you can argue that the withdrawal should be taken into account when looking at overall fairness and contributions.

What This Means for People in Property Disputes

The Shinohara decision marks the end of using “notional property” as an accounting tool in family law property settlements. While this might feel like you’re losing a way to make up for property that’s been spent, the Court has made it clear that these issues can still be dealt with — just not as part of the pool itself.

Instead, your lawyer will now focus on:

• How the use or loss of the property affects your contributions to the marriage or de facto relationship.
• How it affects your financial situation moving forward.

What You Should Do If This Might Affect Your Case

1. Act quickly – The earlier you get advice, the better you can prepare your evidence.
2. Keep records – Bank statements, receipts, and proof of how assets were used can be critical.
3. Be clear about your objectives – If you believe property was wasted or used unfairly, tell your lawyer so they can build that into your contribution and needs arguments.
4. Don’t assume old strategies still work – Property law in family cases has shifted; advice from older cases may no longer apply.

The Shinohara decision changes the way family law property settlements work. Add backs are no longer part of the divisible pool, but the circumstances around dissipated assets are still highly relevant — they’re just dealt with under different parts of the Family Law Act 1975.

If you’re in the middle of a property settlement or about to start one, it’s important to get advice that reflects these changes. At MK Law, we can help you understand how the new rules apply to your situation, gather the right evidence, and present your case in the strongest way possible.