On 23 July 2025, the Full Court of the Federal Circuit and Family Court of Australia delivered the ruling in Shinohara & Shinohara [2025] FedCFamC1A 126, bringing an end to the longstanding practice of “addbacks”.
The practice of add-backs involved notionally including money or assets that had already been spent and no longer existed back into the asset pool as though they still existed.
Shinohara involved a relationship of six years with a relatively modest asset pool of approximately $600,000 plus superannuation. The parties to the matter had agreed to include notional add-backs into the asset pool. These were funds that had previously been spent from the partial property distribution to the husband and from the sale proceeds of a property that had been sold.
At trial the Court excluded the notional addbacks from the property pool without notice to the parties prompting the wife to appeal due to procedural unfairness.
The Full Court in Shinohara interpreted s79 of the Act and held that under s79(3)(a)(i) only property that was in existence at the time of the hearing can be included in the asset pool.
The Full Court emphasised that spent funds continue to remain relevant but should be considered as contributions under s79(4) of the Act and in assessing the current and future circumstances of the parties, under s79(5) of the Act.
Even if “add-backs” are not included in the balance sheet, they are not ignored. The Court will consider expenditure of funds through the lens of who contributed more and who needs more given what has been spent and what remains available for division. It is now more important for parties to keep specific and detailed records of their expenditure during the separation process.
