Key Takeaways
- The Full Court ruling in the Shinohara 2025 case confirmed the abolition of add backs in family law property settlements, allowing only existing property to be divided at trial.
- The Family Law Amendment Act 2024 eliminated the concept of add backs, shifting the focus to contributions and needs when assessing fairness in property settlements.
- The Court emphasized that 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.
- Evidence related to how funds were spent is now critical, as courts cannot restore spent assets; this includes bank statements, receipts, and context for the spending.
- The implications of the Shinohara 2025 decision include a shift in family law practice, with increased reliance on injunctions, reduced litigation over notional figures, and a greater importance placed on accurate evidence and financial conduct.
On 23 July 2025, the Full Court of the Federal Circuit and Family Court of Australia handed down the Shinohara 2025 case (Shinohara & Shinohara [2025] FedCFamC1A 126). The judgment confirmed that add backs are removed from family law property settlements, with the Court ruling that only existing property in family law can be divided at the time of trial. This follows the commencement of the Family Law Amendment Act 2024, which expressly abolished add backs.
This means that the dissipation of assets in family law — whether through legal fees, gambling, or wasteful spending — can no longer be notionally “added back.” Instead, it must now be considered under s79(4) contributions in family law and s79(5) needs and wastage. For separating couples, the principle is clear: add backs are abolished in property settlements, and fairness must now be argued through contributions and needs.
What Are Add Backs in Family Law?
Before the changes, courts could use “add backs” to notionally put back into the property pool money or assets that one spouse had already spent. The idea was to stop one person from draining the pool before trial. Add backs usually arose where:
- Joint funds were used to pay legal fees,
- One spouse withdrew money or made distributions before trial, or
- A spouse wasted money on gambling or extravagant spending.
For decades, add backs gave courts a way to protect fairness. But the system was inconsistent. Sometimes add backs were applied, sometimes they were not, leaving couples uncertain about outcomes.
Why Add Backs Were Abolished
The Family Law Amendment Act 2024 responded to years of debate about whether add backs were fair. The new law is simple:
- Only existing property in family law settlements can be divided at trial.
- If money has been spent, it is gone. The Court will not pretend it still exists.
This change reduces complexity and makes outcomes clearer. Instead of reconstructing pools with notional figures, courts now take a “snapshot” of what actually exists at the final hearing.
The Shinohara Case: Background
The Shinoharas had a short marriage and separated in February 2023. They sold several properties, raising about $592,768. Most of that money was spent on legal fees and other expenses before the case was heard.
At trial, the judge refused to add those spent funds back into the property pool. Instead, the divisible pool was limited to what still existed — a trust, vehicles, and minor assets. The wife appealed, saying this was unfair because both parties had agreed to treat the spent funds as add backs.
The wife subsequently lodged a family law appeal, which brought the matter before the Full Court.
What the Full Court Decided
1. The Law Changed Midway
By the time the appeal was heard, the Family Law Amendment Act 2024 was already in effect. Section 79(3)(a)(i) now states:
“Only existing property, rights, and liabilities at the time of trial are to be identified and divided.”
The Court was bound to apply this new law — meaning add backs could no longer form part of the pool.
2. Fairness Still Matters
Although the Court agreed the wife had not been given a fair chance to argue the point at trial, the bigger issue was that the law had changed. The Court emphasised that wasteful spending or dissipation of assets is not irrelevant. Instead of being “added back,” it must now be assessed through contribution and needs provisions in the Family Law Act.
3. The Outcome
The Court recalculated without add backs and awarded the wife 67.5% of the pool and the husband 32.5%, based on their contributions and future needs.
What Shinohara 2025 Case Means for Property Settlements
Add Backs Abolished in Property Settlements
Courts can no longer rebuild pools with notional figures. If money has been spent, it cannot be added back. This makes settlements more predictable but also means decisions after separation carry greater weight.
Existing Property in Family Law Settlements Only
The property pool now reflects a snapshot of assets at the time of trial. This clarity reduces disputes about past spending and focuses on what remains available for division.
See our explainer on how courts divide property in Victoria.
Dissipation Still Counts Through Contributions and Needs
Although add backs are gone, reckless spending or one-sided use of funds can still influence outcomes.
| Scenario | Before Shinohara | After Shinohara |
| $100,000 gambled away | Court “added back” $100k to pool | Money gone, but other spouse may receive a larger share of remaining assets |
Legitimate expenses, like school fees or mortgage repayments, will be treated differently to reckless wastage.
Evidence Is Critical
Because courts cannot notionally restore money, proving how funds were spent is more important than ever. Evidence may include:
- Bank statements and transaction records,
- Receipts showing expenses,
- Context for spending (necessary living costs vs. reckless spending).
How Sections 79(4) and 79(5) Work
The Court no longer uses add backs, but fairness is still achieved through the operation of section 79 of the Family Law Act. Two key provisions guide how the Court deals with dissipation of assets and overall fairness in property settlements:
- s79(4) contributions in family law property settlements: The Court looks at what each spouse contributed financially (income, assets, savings) and non-financially (homemaking, parenting). If one party wasted assets, their contributions may be discounted.
- s79(5) needs and wastage in family law cases: The Court can make adjustments to achieve fairness. It looks at whether money was wasted, whether one spouse benefited more, and what each party needs to move forward.
Practical Guidance for Clients and Lawyers
The Shinohara 2025 decision reshapes how separating couples, and their lawyers should prepare for property settlements. Key practical takeaways include:
- Balance sheets must reflect reality — only list assets and liabilities that exist at the time of trial.
- Reframe arguments — focus on contributions and fairness, not notional add backs.
- Collect evidence early — bank records and receipts are essential.
- Clients must act cautiously — money spent is gone; poor decisions can still reduce their share.
- Seek interim protection — if there is a risk of assets being dissipated, lawyers should apply for injunctions or interim orders in property matters.
Future Implications
The abolition of add backs and the precedent set in Shinohara 2025 are expected to influence family law practice significantly:
- Greater use of injunctions: Lawyers will increasingly apply for urgent court orders to prevent asset dissipation.
- Reduced litigation over notional figures: Disputes will shift away from “what should be added back” and toward real-time conduct and contributions.
- More reliance on forensic accountants: Tracing spending and verifying whether it was legitimate will grow in importance.
- Earlier settlements: With rules clarified, separating couples may be more willing to negotiate and settle earlier.
- Sharper client advice: Lawyers will need to counsel clients that reckless spending cannot be “undone” and will directly affect their property entitlements.
Moving Forward After Shinohara 2025
The Family Law Amendment Act 2024 and the Shinohara 2025 case mark a turning point in Australian family law. Add backs are gone. Courts now divide only existing property in family law settlements, and fairness is assessed through s79(4) contributions and s79(5) needs and wastage.
For separating couples, this means financial decisions made after separation carry more weight than ever. For lawyers, it highlights the importance of evidence, preparation, and strong strategy.
If you are navigating a family law property settlement, getting the right advice is essential. The new framework makes it clear that add backs are abolished in property settlements and understanding how contributions and needs apply in your circumstances can make the difference between an unfair outcome and a balanced one.
At Pentana Stanton Lawyers, our family law team specialises in guiding clients through property settlements with clarity and confidence.
Book a consultation today for tailored advice and strong representation.
