03 Nov How will add backs affect my family law matter?

The Evolution of Add Backs in Family Law

By Jenna Ryan, Lawyer, Toomey Family Law

What is an add back? 

In family law, an ‘add back’ typically refers to a sum of money, put in the balance sheet as a representation of funds no longer in existence. Using an add back has historically been used as a way to ensure that notional assets were still accounted for in the overall division of property. For example, if one party withdrew $20,000 from the joint bank account and spent it, the other party would seek a $20,000 add back be included.

In 2005, the case of Omacini & Omacini [2005] FamCAFC 104 found that there were three primary types of add backs that are appropriate to include in the property pool and those being legal fees, premature distribution and wastage or reckless expenditure. This was the position at law until the case of Shinohara in 2025.

Shinohara & Shinohara [2025] landmark case

The Family Law Act was amended on 10 June 2025 and made significant changes to the way add backs are included in property settlements.

Shinohara & Shinohara [2025] FedCFamC1A 126 was a landmark case that first tried the 10 June amendments and changed the way add backs are to be included in property settlements.

Ms Shinohara’s matter was first before the Court in March 2025 for a determination on final property and parenting matters. Most relevant, the trial judge, Judge Wilson determined that the property pool included notional add backs for both parties.

Those add backs were derived from a partial property settlement order and from sale proceeds that each party had received in selling their own properties. The wife had spent her entire proceeds on legal fees, and the husband had little remaining.

The appeal 

Ms Shinohara then brought her matter before the Court again in July 2025 for an appeal before Judge Williams, Judge Altobelli and Judge Campton. In that time, the Family Law Act had been amended and those amendments included:

• Section 79 now states “the court must not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.” Previously, the Act had been worded as “the court shall not”.

• Subsection 3 now includes provisions that the court is to identify the “existing legal and equitable rights and interests” and the “existing liabilities” along with the previous requirements that were set out at the superseded subsection 4.

In the appeal, the Full Court found that the amendments of 10 June 2025, prohibited the add backs from being included in the pool because they were not an existing legal or equitable interest or an existing liability.

The future of add backs

The Shinohara case was fundamental in establishing the interpretation of the Family Law Act amendments of 10 June 2025. When the Full Court found that the amended Section 79(3) requires a court identify and adjust only the current property, that excluded the use of add backs this changed the course of many property settlements.

Since Shinohara, there has been further consideration of add backs in light of the amendments and the position at law remains clear. Add backs are to be excluded from the asset pool.

In the appeal case of Jakobsson & Jakobsson (No 2) [2025], Judge Schonell excluded the add back sought by the Appellant for a property transferred out of the pool by the Respondent’s wife and said:

“What might, pre-amendments, have been dealt with as an addback, is now to be addressed in the consideration of the retrospective contributions of the parties at the s 79(4) stage which could encompass the use by one or both parties of items of property either pre-separation or post-separation) or at the s 79(5) stage, a situation which could include where the current and future circumstances of the parties are different to what they would have been but for the way in which one party otherwise dealt with a previously existing item of property.”

So, whilst add backs are no longer permitted in the property pool, the Full Court confirmed that only existing legal and equitable interests and liabilities can be included in the property pool. As a result, traditional add backs such as for legal fees, premature distributions, or wastage are no longer recognised as part of the asset pool.

Subsequent cases, including Jakobsson & Jakobsson (No 2) [2025] and Neville & Bowen [2025] FCWA 226, have reinforced this position. Courts have instead directed that matters previously treated as add backs be considered within the assessment of contributions under s 79(4) or in evaluating the current and future circumstances of the parties under s 79(5).

While the exclusion of add backs simplifies the identification of the property pool, it also raises practical concerns about one party disposing of assets before settlement.

To safeguard against such risks, parties should seek timely legal advice about protective measures such as lodging a caveat, applying for an injunction, or providing undertakings to the Court.

If you need assistance with your separation and complex financial settlements, get in touch with us at Toomey Family Law for a no-obligation consultation or second opinion.