Add-Backs: A Post-Mortem

On 23 July 2025, the Full Court of the Federal Circuit and Family Court of Australia made an important ruling in Shinohara & Shinohara. [2025] FedCFamC1A 126 which ends the long-standing practice of adding back disposed or spent assets to the property pool.

What Are Addbacks — And Why They Mattered

Traditionally, courts permitted notionally “adding back” certain lost or spent assets—legal fees, premature distributions, or wasteful expenditures—to the division pool to achieve a fair result. These were intended to prevent inequitable outcomes arising from one party depleting the pool to the detriment of the other

Key Reform: The Family Law Amendment Act 2024

From 10 June 2025, changes in the Family Law Amendment Act 2024 mean that only assets that actually exist can be included in the property pool. In Shinohara, the Full Court confirmed that assets which no longer exist at trial cannot be added back.

Shinohara’s Outcome and Reasoning

• Procedural Fairness: The trial judge excluded significant agreed addbacks without warning the parties, resulting in procedural unfairness. The Full Court allowed the appeal on this ground

  
  

• The Full Court took the addbacks out of the balance sheet and recalculated each party’s contributions under the new rules. As a result, the wife received 67.5% of the non-superannuation pool and the husband received 32.5%, based on the section 79(5) factors.

  
  

• The Court explained that while notional property can no longer be treated as assets, issues like legal fees, waste, or early withdrawals are still important under section 79(4) and (5).

  
  

In light of. this important decision, parties should now:

1. Gather precise evidence regarding how spent assets were used;

2. Focus arguments on contributions and equitable adjustments, rather than inflating the pool;

3. Avoid simple addback calculations. Instead, use detailed, fact-based strategies that fit within the broader rules of section 79.

Our lawyers at Surge Legal are ready to help clients navigate these important legal changes with confidence

:

• Early strategic intervention: We advise clients promptly on protecting assets and mitigating risk post-separation.

  
  

• Comprehensive documentation: From legal fees to lifecycle of assets, we ensure robust financial records are gathered.

  
  

• Detailed contribution and needs analysis: We address dissipated assets using the correct legal pathways under sections 79(4), 79(5), and 75(2)(o), rather than relying on outdated addback methods.

  
  

• Procedural vigilance: We ensure no procedural unfairness arises, especially if parties assume addbacks are on the table.

  
  

• Client education: We clearly explain to clients why “lost dollars” will not be added back, but rather factored into equitable assessments.

  
  

Conclusion

The Full Court’s decision in Shinohara & Shinohara is a turning point. The old addback rule no longer applies. Now, family law requires strong evidence and clear arguments under the new section 79 rules.

If you want to know how these changes could affect your separation or property settlement, Surge Legal is ready to give you clear and practical advice.