Until recently, Courts were permitted to ‘add back’ on a notional basis assets contributed by either party that had dissipated by the time of the settlement when determining a Family Law property application.

However, the 2025 decision in Shinohara & Shinohara (No 2) by the Full Court of the Federal Circuit and Family Court of Australia has made it clear that, following amendments introduced under the Family Law Amendment Act 2024, addbacks are out.

Grounds for the appeal:

This appeal dealt with parenting and property matters after a six year marriage. A significant issue at trial was the inclusion of “addbacks,” particularly regarding the wife’s contributions (pre-marital funds and an inheritance) which were no longer part of the asset pool. the Trial Judge did not consider these addbacks. Following the assumption that no addbacks would be included, no submissions were presented by the wife regarding the impact of the contributions on the current asset pool.

The three Judges of the Full Court found that the Trial Judge had failed to ensure procedural fairness and consequently they re – exercised the discretion. The appeal was heard following amendments to the Family Law Act 1975 (“the Act”) brought about by the Family Law Amendment Act 2024, so when reassessing the division of property the Full Court used the revised framework.

The decision:

Section 79(3)(a)(i) of the Act now expressly limits the pool of divisible property to that which presently exists. The Appeal Court held that “Statutory interpretation focuses on the plain and ordinary meaning of the words in the section. 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.”

However, although such contributions would now be considered under those parts of the Act that deal with historical contributions (s79(4)) and current and future circumstances (s 79(5)), they can still influence property division. Referring to the 2005 case of Omacini, their Honours said: “ s 79 now directs that the categories identified in Omacini pre-amendment that were notionally added back are to be considered in ensuring a just and equitable outcome, either by way of historical contributions, or by way of their relationship to and impact upon the current and future circumstances at the s 79(5) stage.”

What does it mean?

Add-backs are out! The Shinohara decision confirms the end of notional addbacks under the amended section 79(3) of the Act.

Even partial property and legal fees, which were standard add backs, are now a thing of the past.  

Past financial contributions must now be considered through the statutory framework for historical contributions and future needs, rather than by making adjustments to the asset pool.

Legal strategies must now be amended. Family lawyers often sought the early release of funds to assist parties in meeting day-to-day expenses and legal fees, on the basis that these would form part of their final property settlement. As a consequence of this decision, any early release of funds is just money spent and will not be considered as part of the final property pool. So careful consideration is now required before requesting or agreeing to an early release of funds.

Here to help

Contact us for legal advice or representation if you are trying to navigate a complex property settlement.