The End of Add Backs

A recent judgement in the family law space has marked the end of an era – Shinohara & Shinohara [2025] FedCFamC1A 126 has determined that the time for add backs has now ended.

Shinohara reflects a significant shift in property settlement disputes. It is important for both lawyers and separating couples to be aware of its implications.

The Past

Add-backs were previously a common principle used in family law property disputes to notionally “add back” funds into the asset pool despite them no longer being in existence.

Prior to July 2025, and pursuant to a number of previous decisions including the case of Omacini & Omacini (2005) FLC 93-218, there were three accepted categories of add-backs, which the Family Court would consider in exceptional circumstances, namely:

1. Legal fees (Farnell & Farnell(1996) FLC 92-681);
2. Premature distribution of assets (Townsend & Townsend(1995) FLC 92-569); and
3. Waste or reckless conduct resulting in the reduction of value of an asset or dissipation of matrimonial assets (Kowaliw & Kowaliw (1981) FLC 91-092).

The process of adding funds back was essentially prefaced upon identifying funds that would have been available for division between the parties, but for the payment of legal fees, wastage or the premature distribution of funds.

Omacini made it clear that adding back was a discretionary exercise, and that the discretion should be used when particular circumstances of the case meant that justice and equity required an add back.

For example, Omacini involved a party using approximately $120,000 from the matrimonial pool during proceedings to pay for their legal fees.  The Court decided to essentially “add back” the funds into the pool of assets, which were available for division by including the figure of $120,000 in the balance sheet, notwithstanding the funds no longer being in existence.

The Present

In July 2025, the Full Court in Shinohara determined that as a result of the amendments made by the Family Law Amendment Act 2024, it is no longer possible to include property or assets in the balance sheet as an “addback” if they no longer exist in the hands of either party.

The key facts of Shinohara were as follows:

• The parties were in a 6 year relationship;
• There were two children aged 6 and 5;
• The asset pool was $616,330 plus superannuation (which the parties had agreed to divide separately);
• The parties had agreed to include add-backs of $592,768 in the balance sheet/schedule, being funds that had largely been spent on legal fees and other personal expenses;
• The matter proceeded to trial;
• The primary judge did not notionally add back the funds that had been expended by the parties, despite the parties agreeing that they ought to be “added back” to the pool;
• The Wife appealed the primary judge’s decision on the basis of procedural fairness and the treatment of addbacks post the amendments of section 79; and
• The Full Court confirmed that, as a result of the amendments made by the Family Law Amendment Act 2024, it is no longer possible (or appropriate) to include property in the balance sheet/schedule that no longer exists in the hands of either party.

The Future (practical implications)

The key takeaway from Shinohara is that the days of add backs are no more, well at least for now.

A significant amount has been written on the decision of Shinohara, given it contradicts previous Full Court decisions including Trevi & Trevi (2018) 93-858, and only time will tell if another appellate court or further changes to legislation will change the jurisprudence again.

But for now, with reference to the $120,000 that was spent on legal fees in Omacini, pursuant to Shinohara the expenditure of these funds would be considered by the Court as part of its contributions and future needs assessment (pursuant to Section 79 of the Family Law Act 1975 (Cth)), as opposed to “adding them back” on the balance sheet, as it may have done in the past.

This emphasises the need for thorough record keeping and taking note of expenditure that is out of the ordinary or excessive.

Whilst such funds can no longer be “added back” to a balance sheet or the pool of assets available for division, evidence will be required to support any claim that the expenditure ought to be taken into account by the Court when assessing the parties’ respective contributions and future needs.

Only time will tell if this significantly changes the outcome of each case.

Disclaimer

Please contact us if you require further advice surrounding your or your spouses’ expenditure, post separation.

This article is not legal advice and the views and comments are of a general nature only. This article is not to be relied upon in substitution for detailed legal advice.