Addbacks in Property Settlements: What Has Changed After Shinohara & Shinohara

For years, addbacks were a familiar feature of family law property proceedings in Australia. They allowed a court to notionally restore funds to the asset pool even when those funds no longer existed, effectively treating spent money as though it were still available for division. That approach is now gone.

The Full Court of the Federal Circuit and Family Court of Australia confirmed in Shinohara & Shinohara [2025] FedCFamC1A 126, decided on 23 July 2025, that addbacks can no longer form part of the property balance sheet. If you are going through a separation, this decision has real consequences for how your financial settlement will be approached.

What Were Addbacks in Family Law?

When couples separate, it can take months or even years for a property settlement to be finalised. During that time, money gets spent. Legal fees get paid. Savings get drawn down. Sometimes one party uses joint funds in ways the other considers unfair, whether through extravagant spending, gambling, or accessing accounts to fund a lifestyle the other party had no part in.

Courts developed addbacks as a response to that problem. Under the framework established in Omacini & Omacini (2005), a party could argue that certain funds should be notionally restored to the pool as if they still existed. The court would then take the original value of those funds into account when dividing what remained. The practical effect was that a party who had unfairly dissipated assets would effectively have those amounts counted against their share.

There were recognised categories: funds spent on legal costs, funds one party had benefited from exclusively or an asset that the party unilaterally dissipated, and money wasted through reckless conduct. Each category gave the court a mechanism to address inequality without leaving the other party bearing the full cost of the spending.

What Did the 2025 Family Law Amendments Change?

The Family Law Amendment Act 2024 came into effect on 10 June 2025. The amendments to section 79 of the Family Law Act 1975 rewrote how courts identify the property available for division. Under the new section 79(3)(a)(i), the court is empowered to deal only with property that actually exists at the time of the hearing. Notional property, money that has already been spent, falls outside that scope.

The Shinohara & Shinohara case was the first Full Court decision to apply this amended framework directly to the addbacks question.

What Happened in Shinohara & Shinohara?

The parties had a short marriage, separating in February 2023. The existing property pool at the time of the hearing was approximately $616,330 plus superannuation. The parties had also agreed to include addbacks of around $592,768, representing funds that had largely been spent on legal costs and personal expenses. Those addbacks were substantial. Had they been accepted, they would have nearly doubled the pool.

The primary judge declined to include the addbacks, leaving the divisible pool confined to what actually existed. The wife appealed, arguing this produced an unfair outcome, particularly given her more substantial financial contributions to the relationship.

By the time the appeal was heard, the amended legislation was in force. The Full Court held that the primary judge had made errors, including procedural fairness failures in the way contributions were assessed. The court re-exercised its discretion under the new law. In doing so, it confirmed that only existing property at the time of trial is to be included in the balance sheet for division. The words of Williams, Altobelli and Campton JJ were direct: "The text of s 79(3)(a)(i) is clear. Only the existing property of the parties is to be identified and only that existing property is to be divided or adjusted." See Shinohara & Shinohara [2025] FedCFamC1A 126.

What Happens Now to Dissipated Assets and Wastage?

The abolition of addbacks does not mean that financial misconduct or wastage becomes irrelevant. The Full Court was clear that the circumstances surrounding how money was spent remain squarely in play. They simply have to be argued differently.

Under the post-amendment framework, dissipation of assets through reckless spending must now be evaluated under sections 79(4) and 79(5) of the Family Law Act, rather than being notionally restored to the pool. See Shinohara & Shinohara [2025] FedCFamC1A 126. Section 79(4) governs the assessment of contributions, and section 79(5) deals with future needs and the impact of financial conduct on each party’s circumstances.

In practical terms, this means that if your former partner wasted money or used joint funds for their own benefit, your lawyer needs to frame that within a contributions argument or a needs-based argument. The outcome may ultimately be similar, but the pathway to get there is different and the strategy required is more considered.

What Does the Shinohara Decision Mean for Your Property Settlement?

This decision has shifted the landscape for anyone currently involved in, or approaching, a property settlement.

Financial decisions made after separation carry more weight than ever. Money that is spent before the matter is resolved is gone from the pool. Arguing about it afterwards requires careful legal work through the contributions and needs framework rather than a straightforward ‘addbacks’ claim.

Preserving assets has become more important. Where there is a genuine risk that a former partner may dissipate property before a matter is finalised, there are legal mechanisms available to protect the pool, including injunctions and urgent court orders. Acting early in those situations is essential.

Evidence remains critical. Bank records and documentation of how funds were used will inform how contributions and conduct are assessed under sections 79(4) and 79(5). The better the evidence, the stronger the argument.

Shinohara & Shinohara represents a significant shift in how Australian courts approach property settlements. Understanding what it means for your circumstances requires advice that is specific to your situation.

If you have questions about a property settlement or how recent changes to the Family Law Act may affect you, contact Espino Law to arrange a consultation. Our team works with clients across Sydney and the Macarthur region to help them understand their rights and their options.

Frequently Asked Questions

Are addbacks still allowed in Australian family law after July 2025?

No. Following the commencement of the Family Law Amendment Act 2024 on 10 June 2025, and confirmed by the Full Court in Shinohara & Shinohara [2025] FedCFamC1A 126, addbacks can no longer be included on a property balance sheet. The court can only divide property that genuinely exists at the time of the hearing.

What if my former partner spent money before the property settlement was finalised?

The spending is not ignored. However, it can no longer be treated as a notional addback. Instead, the circumstances of that spending need to be raised through contributions arguments under section 79(4) of the Family Law Act, or through the future needs and conduct provisions of section 79(5). Legal advice specific to your situation is important here, as the strength of these arguments depends on the evidence available.

Does Shinohara apply to cases that started before June 2025?

The Full Court applied the amended legislation as it stood at the date of the appeal judgment in July 2025. This means the new framework applies to matters decided after the amendments came into force, regardless of when proceedings were initiated. If your matter is currently before the court or approaching a hearing, it will be assessed under the new rules.

Can I take steps to protect assets from being spent before settlement?

Yes. If there is a genuine risk that your former partner may dissipate assets before your matter is finalised, it is possible to seek urgent court orders including injunctions to freeze or protect those assets. Acting quickly is important. Speak with a family lawyer as soon as you become aware of the risk.

Does wasteful spending still affect the outcome of a property settlement?

It can. While the court can no longer add spent funds back into the pool as a notional asset, reckless or unfair spending remains relevant to how contributions and future needs are assessed. A party who wasted significant joint funds may still receive a smaller share of what remains, but the argument needs to be structured correctly to achieve that outcome.

What is the difference between a contributions argument and an addback?

An addback treated spent money as though it still existed and placed it on the balance sheet as a notional asset. A contributions argument instead asks the court to take the spending into account when assessing each party's overall financial contributions to the relationship. The pool stays the same. What changes is how the court weighs each party's respective contributions when deciding the percentage split.

Glossary of Key Terms

Addback. A historical family law concept that allowed a court to notionally restore funds to the property pool even though those funds no longer existed. Abolished following the Family Law Amendment Act 2024 and confirmed by Shinohara [2025].

Asset pool. The total value of property, financial resources, and liabilities available for division between separating parties in a family law property settlement.

Balance sheet. A document used in family law proceedings that sets out the assets, liabilities, superannuation entitlements and financial resources of both parties. Following Shinohara, the balance sheet must reflect only property that actually exists.

Contributions assessment. The process by which a court weighs each party's financial and non-financial contributions to the relationship, including income, inheritances, homemaking, and parenting. Under the post-Shinohara framework, the impact of dissipated funds is now argued here rather than through an addback.

Dissipation. The spending or disposal of assets in a way that reduces the property pool available for division. Previously a basis for an addback claim; now addressed through sections 79(4) and 79(5) of the Family Law Act.

Family Law Amendment Act 2024. Federal legislation that amended the Family Law Act 1975, commencing 10 June 2025. The amendments include a revised section 79(3) that restricts property settlement adjustments to existing property only.

Future needs adjustment. An adjustment made under section 79(5) of the Family Law Act that accounts for the future financial circumstances of each party, including age, health, earning capacity, and the care of children.

Injunction. A court order that requires a party to do something or to stop doing something. In family law property proceedings, an injunction can be used to prevent a party from selling, transferring, or otherwise dealing with assets before a settlement is reached.

Notional property. Property that no longer physically exists but was previously treated as though it did for the purposes of a property settlement calculation. This concept has been abolished under the amended Family Law Act.

Property settlement. The legal process by which separating couples divide their assets, liabilities, and financial resources. In Australia, property settlements under the Family Law Act must be just and equitable.

Section 79(3)(a)(i). The amended provision of the Family Law Act 1975 that restricts the court to identifying and adjusting only property that exists at the time of the hearing. This is the operative provision that abolished addbacks.

Section 79(4). The provision governing the assessment of contributions in a property settlement, including financial contributions, non-financial contributions, and contributions as homemaker or parent.

Section 79(5). The provision governing future needs adjustments, including considerations of each party's age, health, income, earning capacity, financial resources, the care of children, and the impact of the settlement on their ability to become financially self-sufficient.

Wastage. Conduct by one party that results in the reduction or dissipation of assets that would otherwise have formed part of the property pool. A recognised basis for adjusting a settlement outcome, now argued under sections 79(4) and 79(5).