Introduction
Q1: Can the court put spent money back into the asset pool?
A: No. After the 2024 Family Law Amendment, courts can no longer add non-existent money back to the pool. The balance sheet must only include property that actually exists at the time of trial. Reference: Shinohara & Shinohara [2025] FedCFamC1A 126
Q2: If my ex wasted our assets, do I just lose that money?
A: No. The court adjusts your share of the remaining assets to compensate. Instead of pretending the money still exists, the court gives you a bigger percentage of what is actually left. Reference: Wei (No. 3) [2025] FedCFamC1F 142
Q3: Does this new rule also apply to money spent on legal fees?
A: Yes. Legal fees, interim distributions, and deliberate waste are all handled the same way. The court treats them as factors when deciding each party's percentage, not as phantom assets on the balance sheet. Reference: Jakobsson (No 2) [2025] FedCFamC1A 137
What did the 2024 reforms change about property division?
The 2024 Family Law Amendment Act killed add-backs. For decades, Australian courts used a workaround called add-backs (or notional property). If one party spent $100,000 on legal fees from the joint pool, the court would pretend that money still existed and add it back to the balance sheet. The idea was to make things fair. The problem was it often didn't work.
Under the amended section 79(3)(a)(i) of the Family Law Act 1975, the court must now only identify the existing property of the parties. Property that has been spent, wasted, or otherwise disposed of cannot appear on the balance sheet.
This wasn't a sudden shift. As early as 2018, the Full Court in Trevi & Trevi [2018] FamCAFC 173 described the reasoning behind add-backs as unduly simplistic. But it took the 2024 amendments and the Shinohara decision to close the door for good.
The parties had an agreed asset list that included $589,155 in actual sale proceeds held in trust. The list also included notional add-backs: $239,992 attributed to the father and $352,776 to the mother, representing funds already spent on legal fees and partial settlements. The trial judge declined to include these add-backs. The mother appealed.
The Full Court upheld the exclusion of add-backs — non-existent property cannot be identified for division. But it found the trial judge's overall property distribution was flawed, so it allowed the appeal in part and set aside the property orders. The spent amounts should instead be weighed as historical contributions under s 79(4) or as adjustments under s 79(5).
Outcome: The Full Court re-exercised discretion, removed the notional assets, and divided the actual existing property 67.5% to the mother and 32.5% to the father.
"The text of s 79(3)(a)(i) is clear. Only the existing property of the parties is to be identified and only that existing property is to be divided or adjusted."
The court went further:
"As notional property does not exist, it cannot be identified to form part of the balance sheet recording the current items of the parties' property."
If the money is gone, it stays off the balance sheet. But it is not ignored. The court handles it through a different mechanism.
How does the court handle wasted assets without add-backs?
The court adjusts your percentage share of what is left. Instead of inflating the pool with phantom money, the court considers wasted assets when deciding how to split the actual remaining property. This happens at two stages:
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Contributions assessment (s 79(4)): The court looks at how each party contributed to or diminished the asset pool. If one party burned through $300,000 while the other spent $10,000, that imbalance shows up here.
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Adjustments for current and future circumstances (s 79(5)): The court considers factors affecting a just distribution. Section 79(5)(d) specifically targets intentional or reckless wastage of assets. Legal fee spending and interim distributions can be taken into account under the catch-all provision in s 79(5)(v).
One 2025 case shows just how far the court will go to protect the disadvantaged party.
The parties originally had assets worth over $1.2 million. By the time the case went to trial, only $172,517 remained. Over $1 million had been spent, mostly on legal fees. The husband alone spent approximately $300,000 on successful appeals. The wife spent $10,000.
The parties wanted the court to add back $1,031,483 as notional property. The court refused.
Outcome: The court assessed contributions at 50/50, then applied a 50% adjustment in the wife's favour under s 75(2)(o) to account for the husband's disproportionate legal spending. The wife received 100% of the remaining $172,517 pool. (This case was decided under the pre-amendment framework; the equivalent provision under the new Act is s 79(5)(v).)
"Extensive use of add backs has the potential to skew the distribution of the actual property in an unfair manner, unless great care is taken."
The logic is straightforward: the more add-backs you pile on, the more the actual property gets distorted. The court now avoids the problem entirely by keeping the balance sheet honest and adjusting percentages instead.
| Comparison | Wei (No. 3) [2025] | Jakobsson (No 2) [2025] |
|---|---|---|
| Asset pool at trial | $172,517 | Moderate pool remaining |
| Claimed add-backs | $1,031,483 claimed | $87,833 from SMSF |
| Court's approach | Refused add-backs; adjusted percentage under s 75(2)(o) | Removed add-back; adjusted percentage under s 79(5)(v) |
| Result for wife | 100% of remaining pool | 63% of non-super property |
| Key factor | Husband spent $300K on legal fees vs wife's $10K | Husband's SMSF payment to third party + income disparity |
The deciding factor: In both cases, the court refused to add phantom money to the balance sheet. But it compensated the disadvantaged party by giving them a larger share of what actually existed. The bigger the gap in spending, the bigger the percentage adjustment.
What about money already distributed during litigation?
Interim payments received during the case are treated the same way. Courts used to add these back to the pool. Now they are treated as premature distributions of the final entitlement.
During 9 years of relationship and subsequent litigation, the parties received interim property distributions. The father received $245,000, roughly $50,000 more than the mother. The father also unilaterally claimed the main residence CGT exemption on a property sale, despite neither party having lived there since 2017. This used up the exemption and left the mother facing a future CGT bill when she eventually sold the former family home.
Outcome: Following Shinohara, the court ruled these sums are not notionally added back. Instead, they were taken into account under s 79(5). The final division was 77% to the mother and 23% to the father.
"Those sums are not notionally added back to the parties' existing assets, as the practice is now deprecated following recent amendments to Pt VIII of the Act."
The word the court used is deprecated. Not discouraged. Not disfavoured. Deprecated. Like old software that no longer works. If your lawyer argues for add-backs in 2025, expect the judge to push back.
What should you do if you suspect your ex is wasting assets?
Stop thinking about add-backs and start building your case for a percentage adjustment. The money your ex spent is not coming back into the pool. But the court will account for it when deciding how much of the remaining pool you get.
Only real assets go on the balance sheet. Shinohara & Shinohara confirmed that the court will strip phantom money from the pool. Do not waste time arguing for add-backs.
The bigger the spending gap, the bigger your adjustment. In Wei (No. 3), the wife received 100% of the remaining pool because the husband had spent 30 times more on legal fees.
Interim payments count as early distributions. Stubbs (No 3) shows that if your ex received more during litigation, the court will balance the books at the end.
Frame your argument around sections 79(4) and 79(5). Jakobsson (No 2) confirms that the correct path is through contribution assessment and future circumstances, not notional add-backs.
Recommended Actions：
- Track all spending by both parties with evidence
- Argue for a higher percentage of actual remaining assets
- Frame wastage under s 79(5)(d) and legal fees under s 79(5)(v)
- Present interim payments as premature distributions
- Get legal advice early to protect remaining assets
Actions to Avoid：
- Demand the court add spent money back to the pool
- Inflate the asset list with notional property
- Treat legal fees as phantom assets on the balance sheet
- Wait until trial and hope the court fixes everything
- Assume the old add-back rules still apply
