One of the most common questions in a financial separation sounds simple. My ex drained the joint account, ran up the credit cards, or spent tens of thousands on legal fees and a new car. Can the court put that money back into the pool before it is divided?
For decades the answer was sometimes yes, through a mechanism lawyers called an add-back. As of 10 June 2025, that answer has changed. This post explains what an add-back was, what changed in the Act, the case that confirmed it, and the route by which wasted money can still affect your settlement even though it can no longer be added back.
The short answer
The court now divides only the property that actually exists at the time of the hearing. Money that has already been spent cannot be notionally restored to the pool, but how and why it was spent can still change the percentage each party receives.
What an add-back used to mean
An add-back was a way of treating money that no longer existed as though it were still in the property pool. If one party had spent, transferred, or wasted joint funds, the court could notionally add that amount back to the balance sheet, so the pool was divided as if the money were still there. The party who had spent it was, in effect, treated as having already received their share of it.
Before 10 June 2025, the courts recognised three accepted categories of add-back, drawn from a line of authority including Omacini and Omacini (2005) FLC 93-218. In broad terms these covered money spent on legal fees from joint funds, the premature distribution of an asset to one party, and the reckless or deliberate waste of an asset. Add-backs were always treated as the exception rather than the rule, applied in limited circumstances, but they were a familiar feature of the balance sheet in contested matters.
What changed on 10 June 2025
The Family Law Amendment Act 2024 came into force on 10 June 2025 and rewrote the way property settlement is decided. One of the changes went to the very first step: identifying what is in the pool.
Under the new section 79(3) of the Family Law Act 1975, the court is directed to identify the existing legal and equitable rights and interests in the property of the parties. The word that does the work is existing. The pool is now limited to property that actually exists at the time of the hearing. The equivalent rule for de facto couples sits in section 90SM(3). Property that has been spent, lost, or dissipated is no longer in the pool, because it is no longer property the parties have.
That single word narrows the balance sheet and removes the foundation that add-backs were built on. If the money is gone, there is nothing existing to divide, so there is nothing to add back.
Shinohara and Shinohara: the case that confirmed it
The leading decision is Shinohara and Shinohara [2025] FedCFamC1A 126, handed down by the Full Court of the Federal Circuit and Family Court of Australia on 23 July 2025.
In that matter the parties had agreed between themselves to include around 590,000 dollars of add-backs in the balance sheet, being funds largely spent on legal fees and personal expenses. The trial judge declined to add the money back, but did so without giving the parties notice that the new section 79 would be applied that way. On appeal, the Full Court allowed the appeal on the procedural fairness point, because the parties should have been told the add-backs were being excluded before the decision was made. More importantly for everyone else, the Court confirmed the substantive position: after the 10 June 2025 amendments, property that no longer exists cannot be included in the pool as an add-back. When the Court re-exercised its discretion, it divided only the existing property and adjusted the percentages to reflect what had happened to the spent funds.
The case settled the question that had been hanging over financial matters since the amendments commenced. Add-backs, as a way of inflating the pool, are over.
So can wasted money still count? Yes, through a different door
This is the part that older guidance gets wrong, and the part that matters most if you are separating now. The end of add-backs does not mean a party can spend joint money freely and face no consequence. It means the consequence arrives through a different part of the Act.
Two routes remain open. The first is the contributions assessment in section 79(4). When the court weighs what each party contributed to the property and to the welfare of the family, it can take into account that one party drew down or wasted joint funds. A party who spent heavily after separation may be assessed as having contributed less, or as having already received a benefit, which shifts the percentage split.
The second is the assessment of each party's current and future circumstances in section 79(5). The amended Act brought the relevant future circumstances factors together in this subsection and expressly included wastage among the matters the court can consider, alongside liabilities, family violence, and the housing needs of any children under 18. So if one party has dissipated assets, the court can adjust the division to reflect that when it looks at where each party stands now and will stand in future.
The practical effect is similar to the old add-back in many cases, but the mechanism is different. The court no longer pretends the money is still there. Instead, it divides what actually exists and then adjusts the percentages so the party who wasted the money carries the cost of having done so.
What this means in practical terms
If you are worried that your former partner is spending down joint assets, the lesson is the same as it always was, and arguably more important now: keep records. Evidence of how much was spent, when, and on what is what a court uses to make a fair adjustment under section 79(4) or section 79(5), and in mediation it is what lets each party see how a court might approach the spending when they shape their own proposals. Bank statements, transaction histories, and a clear timeline are worth far more than an accusation.
If you are the party who has spent money since separation, do not assume it has simply vanished from the equation. Reasonable living expenses are one thing. Large withdrawals, gifts to family members, gambling, or running up legal costs from joint funds can all be raised by the other party and can move the final split against you, even though the money is gone and cannot be added back.
For both parties, the underlying point is that the pool is now a snapshot of what exists, taken at the hearing, not a reconstruction of what once existed. That makes the timing and the paper trail of post-separation spending more important, not less.
How this plays out in family dispute resolution
Most separating couples will work out their financial settlement through family dispute resolution rather than a contested hearing. The end of add-backs still shapes those conversations, because the parties are reality-checking the same numbers a court would use.
In mediation, the practitioner does not decide who is right or put a proposal of their own. The practitioner's role is to help each party shape and test the proposals they put to each other. Where one party feels the other has wasted joint money, the practitioner can help both parties separate two questions that the old add-back language used to blur together. First, what does the pool actually contain today, which is now simply the existing assets and liabilities. Second, what adjustment to the percentage split, if any, fairly reflects how money was spent along the way. The practitioner can explain in general terms how a court tends to approach wastage, so each party can factor it into their thinking, but that is general information, not legal advice, and the adjustment itself is a matter for the parties to agree or for a court to decide, not for the practitioner to impose. Keeping those two questions apart, in the order the Act now uses, tends to produce clearer and more durable agreements, because it mirrors how a court would approach the same facts if the matter did not settle.
A party who understands that spent money will not be notionally restored, but that the manner of spending can still shift the percentages, is in a much better position to make and respond to realistic proposals. That is the kind of clarity good preparation and an honest exchange of documents are designed to produce.
The takeaway
The add-back, as a device for putting spent money back into the property pool, has largely ended. From 10 June 2025 the court divides only the property that exists at the time of the hearing, under section 79(3) for married couples and section 90SM(3) for de facto couples, and Shinohara and Shinohara confirmed it. Wasted or dissipated money is not ignored. It moves to the contributions assessment in section 79(4) and the current and future circumstances in section 79(5), where it can still change the share each party walks away with. The pool is what exists. The history of how it got there is dealt with in the split.
This article is general information only. It is not legal, tax, or financial advice and does not take account of your personal situation. The law changes, some measures mentioned may be proposals that are not yet in force, and fees and figures can change over time, so check anything that matters and get advice for your own circumstances from a family lawyer, an accredited Family Dispute Resolution Practitioner, or a qualified tax or financial professional before acting. If you or someone else is in immediate danger, call 000. For confidential support with family violence or concerns about a child's safety, contact 1800RESPECT on 1800 737 732.