Rethinking property splits: No more counting on addbacks
3 mins reading time
Dividing property after a separation can be complicated. The existing assets, liabilities and financial resources of the parties are assessed as-at the most up to date or current time, which can be at the date of a trial, an interim court hearing, a mediation or other moment. Controversy often ensues when one party has spent or withdrawn money before the settlement. For years, lawyers and courts included these amounts as “addbacks” of notional property in the property pool, treating them like assets that should still count. But a recent court decision in Shinohara v Shinohara has changed that approach. The ruling confirms that these notional amounts are no longer considered property available for division, which means they won’t be listed in the balance sheet.
The four step approach to family law property disputes
In most Family Law property cases, the lawyers and/or Courts adopt a four-step approach when determining what outcome would be just and equitable:
- Identify and ascribe values to the assets, liabilities and financial resources of the parties (“the property pool”).
- Consider the various contributions (financial or non-financial, including in the role as parent & homemaker) the parties have made to the property pool/relationship.
- Determine what ongoing needs each party has (health, care of children, income earning capacity).
- Determine what adjustments, if any, to the property pool would give effect to a just and equitable outcome.
Until recently, property pool Balance Sheets in Family Law property matters were generally made up of liabilities, superannuation and assets, which would often consist of notional addbacks, being property that no longer exists.
Most commonly, parties would seek to notionally ‘add back’ funds withdrawn by the other party from joint bank accounts, or funds ‘wasted’ on unnecessary or excessive expenditure. However, the Full Court on a property appeal in Shinohara v Shinohara [2025] FedCFamC1A 126 (“Shinohara”) recently determined that addbacks do not fall within the definition of ‘property’ and notional property will no longer be considered as property in the balance sheet.
Shinohara shakes up whether addbacks can be included in balance sheet
In the matter of Shinohara, a separated husband and wife were involved in a family law dispute where the division of their property was being decided. The relationship was short in the scheme of things, with the parties living together for just over six years, with two children, aged six and four years.
The parties presented a Balance Sheet to the Court that had two pools. One pool contained the parties’ superannuation interests, and the other pool contained all of the parties’ other property. This consisted of $616,631 in existing assets and a further $592,768 in notional addbacks. The addbacks included sale proceeds from properties already retained by the parties, as well as previous part property settlement payments made to the parties.
The trial Judge determined that addbacks ought not to be included in the property pool available for division. In those circumstances, the parties were not given the opportunity to make submissions with respect to those addbacks. The alleged lack of procedural fairness gave rise to the Wife’s appeal.
Appeal by Wife
The Family Law Amendment Act 2024 (Cth), which took effect on 10 June 2025, had to be considered by the Court on appeal in this case, given the appeal was heard on 2 July 2025.
The Court on appeal was requested to re-exercise its discretion to vary the Final Orders made at trial. The Court agreed with the trial judge that add-backs not be included in the property pool, under Section 79(3)(a) of the Family Law Act 1975 (Cth) (the Act), which says that in order to identify whether there should be an adjustment of property interests, the Court must consider existing rights in any property. Shinohara determined that “only the existing property of the parties is to be identified and only that existing property is to be divided or adjusted.”
The property pool available to divide was therefore $616,631, as opposed to the original $1,209,399.
The Court on Appeal found that whilst not included in the property pool, the Wife’s significantly greater financial contributions (a $400,000 gift from her father as an example) ought to justify a division of the property pool in her favour 70/30%.
The Husband had primary care of the children and thus received a 2.5% adjustment in his favour to take into account his future needs. Overall, the Wife received 67.5% of the existing non-superannuation property pool, and the Husband received 32.5% of the pool. The parties consented to equalise their superannuation entitlements.
Key take aways for property division in a family law dispute
The determination in Shinohara is not to say that notional property that has been received or spent previously will not have any relevance to property matters, however, those items can no longer be added back into the property pool. Instead, the new amendments to the Family Law Act set out that rather than those items being included in ‘step 1’ of the considerations, they would most likely be factored into steps 2 and 3.
For example:
- Section 79(5)(d) of the Act considers whether a party has wasted property or financial resources.
- Section 79(5)(n) considers the extent to which each party has contributed to the property of the other.
- Section 79(5)(v) provides a ‘catch all’ clause for the Court to consider any other fact of circumstance which should be taken into account.
For practitioners, parties need to be aware that ‘dollar-for-dollar’ addbacks are no longer going to be entertained by the Court. Parties should keep detailed records of all amounts they say should be taken into consideration at the ‘contributions’ or ‘current and future circumstances’ stages, particularly for matters with short relationships.
Contact our family law team for advice
If you have any queries about addbacks, factors to be taken into consideration in a property settlement matter, or any family law issue, please do not hesitate to reach out to our friendly Family Law team at Macpherson Kelley.
The information contained in this article is general in nature and cannot be relied on as legal advice nor does it create an engagement. Please contact one of our lawyers listed above for advice about your specific situation.
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Rethinking property splits: No more counting on addbacks
Dividing property after a separation can be complicated. The existing assets, liabilities and financial resources of the parties are assessed as-at the most up to date or current time, which can be at the date of a trial, an interim court hearing, a mediation or other moment. Controversy often ensues when one party has spent or withdrawn money before the settlement. For years, lawyers and courts included these amounts as “addbacks” of notional property in the property pool, treating them like assets that should still count. But a recent court decision in Shinohara v Shinohara has changed that approach. The ruling confirms that these notional amounts are no longer considered property available for division, which means they won’t be listed in the balance sheet.
The four step approach to family law property disputes
In most Family Law property cases, the lawyers and/or Courts adopt a four-step approach when determining what outcome would be just and equitable:
- Identify and ascribe values to the assets, liabilities and financial resources of the parties (“the property pool”).
- Consider the various contributions (financial or non-financial, including in the role as parent & homemaker) the parties have made to the property pool/relationship.
- Determine what ongoing needs each party has (health, care of children, income earning capacity).
- Determine what adjustments, if any, to the property pool would give effect to a just and equitable outcome.
Until recently, property pool Balance Sheets in Family Law property matters were generally made up of liabilities, superannuation and assets, which would often consist of notional addbacks, being property that no longer exists.
Most commonly, parties would seek to notionally ‘add back’ funds withdrawn by the other party from joint bank accounts, or funds ‘wasted’ on unnecessary or excessive expenditure. However, the Full Court on a property appeal in Shinohara v Shinohara [2025] FedCFamC1A 126 (“Shinohara”) recently determined that addbacks do not fall within the definition of ‘property’ and notional property will no longer be considered as property in the balance sheet.
Shinohara shakes up whether addbacks can be included in balance sheet
In the matter of Shinohara, a separated husband and wife were involved in a family law dispute where the division of their property was being decided. The relationship was short in the scheme of things, with the parties living together for just over six years, with two children, aged six and four years.
The parties presented a Balance Sheet to the Court that had two pools. One pool contained the parties’ superannuation interests, and the other pool contained all of the parties’ other property. This consisted of $616,631 in existing assets and a further $592,768 in notional addbacks. The addbacks included sale proceeds from properties already retained by the parties, as well as previous part property settlement payments made to the parties.
The trial Judge determined that addbacks ought not to be included in the property pool available for division. In those circumstances, the parties were not given the opportunity to make submissions with respect to those addbacks. The alleged lack of procedural fairness gave rise to the Wife’s appeal.
Appeal by Wife
The Family Law Amendment Act 2024 (Cth), which took effect on 10 June 2025, had to be considered by the Court on appeal in this case, given the appeal was heard on 2 July 2025.
The Court on appeal was requested to re-exercise its discretion to vary the Final Orders made at trial. The Court agreed with the trial judge that add-backs not be included in the property pool, under Section 79(3)(a) of the Family Law Act 1975 (Cth) (the Act), which says that in order to identify whether there should be an adjustment of property interests, the Court must consider existing rights in any property. Shinohara determined that “only the existing property of the parties is to be identified and only that existing property is to be divided or adjusted.”
The property pool available to divide was therefore $616,631, as opposed to the original $1,209,399.
The Court on Appeal found that whilst not included in the property pool, the Wife’s significantly greater financial contributions (a $400,000 gift from her father as an example) ought to justify a division of the property pool in her favour 70/30%.
The Husband had primary care of the children and thus received a 2.5% adjustment in his favour to take into account his future needs. Overall, the Wife received 67.5% of the existing non-superannuation property pool, and the Husband received 32.5% of the pool. The parties consented to equalise their superannuation entitlements.
Key take aways for property division in a family law dispute
The determination in Shinohara is not to say that notional property that has been received or spent previously will not have any relevance to property matters, however, those items can no longer be added back into the property pool. Instead, the new amendments to the Family Law Act set out that rather than those items being included in ‘step 1’ of the considerations, they would most likely be factored into steps 2 and 3.
For example:
- Section 79(5)(d) of the Act considers whether a party has wasted property or financial resources.
- Section 79(5)(n) considers the extent to which each party has contributed to the property of the other.
- Section 79(5)(v) provides a ‘catch all’ clause for the Court to consider any other fact of circumstance which should be taken into account.
For practitioners, parties need to be aware that ‘dollar-for-dollar’ addbacks are no longer going to be entertained by the Court. Parties should keep detailed records of all amounts they say should be taken into consideration at the ‘contributions’ or ‘current and future circumstances’ stages, particularly for matters with short relationships.
Contact our family law team for advice
If you have any queries about addbacks, factors to be taken into consideration in a property settlement matter, or any family law issue, please do not hesitate to reach out to our friendly Family Law team at Macpherson Kelley.