Introduction

Family law in Australia is a dynamic and evolving space. It is a pivotal time for Australian family law and 2025 saw a number of significant developments ‒ spanning legislative changes, landmark cases, and regulatory updates, while the profession keenly witnessed the changes unfold.

The most notable and recent development has been the major legislative reform to the Family Law Act 1975 (Cth), implemented on 10 June 2025. In addition to these amendments, a significant development in Australian family law was the upheaval of “add-backs” in financial proceedings.

The 2025 Amendments to the Family Law Act: A New Era for Family Law

What is the Amendment Act 2024?

On 10 December 2024, the Australian Parliament enacted the Family Law Amendment Act 2024 (the “Amendment Act”), introducing wide reaching changes to the Family Law Act 1975 (the “Act”). These reforms primarily affect how property settlements are handled and apply to both new and ongoing matters, unless the case has already reached a final hearing.

Changes to the property settlement process

The Amendment Act reshapes the criteria the Federal Circuit and Family Court of Australia (the “Court”) must consider when determining property settlements. Although the familiar four step methodology remains, its operation is now more explicitly drawn from legislation. The Court must:

• identify the total asset and liability pool of the parties;
• evaluate each person’s contributions, whether financial, domestic, or related to family welfare;
• examine the parties’ present and future circumstances, such as age, health, income prospects, and the needs and housing requirements of any children; and
• ensure the outcome is fair and equitable in light of all relevant considerations.

A major development is the formal incorporation of principles from Kennon and Kennon. The Court is now required to consider how family violence may have affected a party’s contributions or ongoing needs, reinforcing the relevance of domestic violence in financial matters. Further, Section 4AB of the Act has been expanded; economic and financial abuse are now defined more clearly, and dowry-related abuse is expressly recognised.

Assessing current and future circumstances

The Amendment Act extends the list of matters the Court may address when assessing the parties’ ongoing financial needs. These include the following.

• Family violence ‒ courts may consider its economic impact, adopting a wider interpretation than previously recognised in case law.
• Wastage ‒ if one party has deliberately or irresponsibly depleted assets or financial resources.
• Liabilities ‒ the Court may consider the nature and context in which debts were incurred.
• Housing requirements ‒ judges may now look more closely at the need to secure suitable accommodation for children under 18.

Family violence and spousal maintenance

Under the Amendment Act, family violence is now expressly included among the factors the Court may weigh when determining spousal maintenance. This enables the Court to assess the economic disadvantage suffered by a party as a result of experiencing, or being exposed to, family violence.

New legal definition: companion animal

Traditionally, animals were treated as ordinary property in family law. The Amendment Act introduces a statutory definition of “companion animal”, being an animal kept predominantly for companionship. This definition excludes assistance animals, animals kept for work or agricultural use, and animals involved in research.

The Court may now make a broader range of interim and final orders concerning companion animals, such as:

• allocating sole ownership of the animal to one party;
• transferring ownership to another person (with consent); or
• directing that the animal be sold.

Notably, courts cannot order shared ownership or shared care arrangements for companion animals.

When deciding such matters, the Court may consider:

• any history of abuse or threatened harm towards the animal;
• emotional connections between the animal and either party or any child; and
• each party’s ability to care for the animal into the future.

Add-Backs in Family Law

In Shinohara & Shinohara (“Shinohara”), the Full Court, sitting in its appellate jurisdiction, held that the recent amendments to Section 79 of the Act now prevent courts from including notional property ‒ or add-backs ‒ in the parties’ balance sheet.

What are add-backs?

Add-backs occurred when the Court notionally returned funds or other assets to the parties’ asset pool after one party had used them for their own purposes, typically following separation.

The most common types of add-backs were:

• money spent on legal fees;
• where there has been a premature distribution of matrimonial assets; and
• waste or wanton, negligent or reckless dissipation of assets.

Illustrative example

Suppose a couple separates, and, at the time of separation, there is AUD200,000 sitting in a redraw facility attached to the former matrimonial home. This money forms part of the property to be divided.

If, after separation, one party uses AUD50,000 of that joint money to pay their legal fees, the Court could treat the AUD50,000 as if it still existed and was still part of the shared property pool. The AUD50,000 would then be “added back” as a notional asset belonging to the person who spent it.

The facts behind Shinohara

The financial aspects of the case were relatively straightforward. The parties had lived together for just over six years before separating in February 2023. They had two young children, aged six and four. The mother experienced mental health difficulties, and since separation, the children had primarily lived with the father, with the mother spending only limited supervised time with them.

For the purposes of the hearing, both the trial judge and the Full Court adopted a two-pool approach. The first pool comprised the parties’ superannuation interests, valued at AUD616,330. The second pool contained all the non-superannuation property, including notional add-backs totalling AUD1,209,399. Of that second pool, AUD616,631 represented existing assets, while AUD592,768 consisted of notional property added back ‒ primarily funds spent by each party after receiving partial property settlements, and the proceeds of two properties previously owned individually by the parties.

What Shinohara changes: the end of add-backs

In Shinohara, the Full Court allowed the appeal against the property orders on the basis that the trial judge had denied procedural fairness by removing the agreed add-backs from the balance sheet without notifying the parties. The Court also found that the trial judge failed to consider six material factors that favoured the wife.

The Full Court was then required to re-exercise discretion using the same evidentiary material that had been before the trial judge. In doing so, it removed the add-backs from the agreed balance sheet, finding that the recent legislative amendments no longer permitted notional property to be included in the pool for the purposes of Section 79 of the Act.

Section 79(3) of the Act provides that:

(3)       in considering what order (if any) should be made under this section in property settlement proceedings, the court:

(a)       is to identify:

(i)       the existing legal and equitable rights and interests in any property of the parties to the marriage or either of them; and

(ii)       the existing liabilities of the parties to the marriage or either of them; and

(b)       is to take into account (except for the purpose of making an order with respect to the ownership of property that is a companion animal):

(i)       the considerations set out in subsection (4) (considerations relating to contributions); and

(ii)       the considerations set out in subsection (5) (considerations relating to current and future circumstances).

[Emphasis added]

Citing the text of Section 79(3)(a)(i) of the Act, the Full Court confirmed that only existing legal and equitable interests at the date of trial may be included. Consequently, property that no longer exists cannot be added back and treated as property for division.

The Full Court identified several subsections of Section 79(5) that may now operate to address issues previously dealt with through notional add-backs, as set out below.

• Section 79(5)(d) ‒ Wastage: this requires the Court to consider whether a party has intentionally or recklessly wasted property or financial resources, and the impact of that conduct on the parties’ financial circumstances.
• Section 79(5)(n) ‒ Contributions to the Other Party’s Current and Future Circumstances: this allows the Court to consider the extent to which each party has contributed to the other party’s property or financial resources at the time of trial. This may include interim or partial property settlements or payments made as litigation funding.
• Section 79(5)(v) ‒ The “Catch All” Provision: formerly Section 75(2)(o) of the Act, this broad discretionary category can encompass circumstances previously treated as notional add-backs, such as the disposal or expenditure of property, or the use of property to pay legal fees.

Consequently, the Full Court concluded the AUD592,768 that no longer existed ought to be taken into account by way of Section 79(5) as a consideration of the current financial circumstances of the parties.