Significant changes to Australian family law came into effect in 2025 and together with a recent Court decision in Shinohara & Shinohara have reshaped how family courts approach property settlement, particularly in relation to the long-debated issue of how to treat money removed, spent or wasted by one party to the disadvantage of the other, which can occur during a relationship or after separation, but prior to a property settlement being finalized.
What Was Shinohara About?
In Shinohara & Shinohara, the parties disagreed on how to treat various funds that had been spent or reduced before trial — including proceeds from sold investment properties and legal expenses.
Historically, courts sometimes used “add-backs” to treat spent or missing funds as if they still existed, effectively inflating the property pool.
The Full Court took the opportunity to clarify the law under the new s 79 of the Act — and the result is a major shift for property settlement.
The Full Court confirmed that, under the amended legislation:
Only assets and liabilities that actually exist at the time of the hearing can form part of the property pool.
This means:
- if a spouse spent money post-separation,
- or withdrew joint funds,
- or used money on legal fees,
- or dissipated assets,
those amounts cannot be added back as notional assets in the balance sheet. Prior to the 2024 changes to the Family Law Act, such amounts could be treated as if existing, held and retained by the party that spent, withdrew, used or dissipated them. This may include things such as gambling, sending money to relatives, excessive personal spending, selling assets, secret withdrawals and other such behavior which negatively impacts the value of the total asset pool.
Does This Mean Wasteful Spending Doesn’t Matter?
No — the Court made it clear that financial behaviour still matters, but the law now deals with it differently. The party that spent, withdrew, used or dissipated money from the property pool does not simply “get away with it”.
Shinohara confirmed that instead of adding the spent money into the pool, the Court now considers such conduct “wastage”.
Wasteful spending may now affect:
- Contributions (one party effectively gave more than the other if one party wasted resources from the property pool)
- Adjustments for fairness
- Future needs (if one party is disadvantaged by dissipation)
As such, in practice, irresponsible spending now called “wastage” can still reduce a party’s final entitlement — the method has simply changed.
How These Changes Fit Into the Four-Step Process
The four-step process remains, but with clearer boundaries.
Step 1 — Identify the Pool
Only existing property and liabilities are counted. No notional assets. No artificial add-backs.
Step 2 — Assess Contributions
If one party wasted or spent assets, the other may be credited with greater contributions.
Step 3 — Assess Future Needs
The impact of spending can justify a percentage adjustment if one party now faces financial disadvantage.
Step 4 — Achieve a Just & Equitable Outcome
The Court uses adjustments — not add-backs — to deal with fairness.
Why This Matters for Separating Couples
The Shinohara decision and the 2024 legislative reforms (which came into effect this year) bring a clearer, more structured approach to property settlement. In simple terms, missing money no longer goes back into the pool, but it can still change the final percentage you receive.
Fairness is now achieved through contributions and needs-based adjustments — not an accounting exercise.
Need Advice About How This Affects Your Matter?
The new rules can significantly change your strategy and your likely outcome. Our Family Law team can help you understand how Shinohara applies to your case and what practical steps you should take now to protect your financial position.
Should you have any questions about how this may apply to your situation, please do not hesitate to contact us.
About the Author: This article is authored by Caroline Maradzika Caroline Maradzika is a family law solicitor specialising in parenting and property matters. She also practices in the Magistrates Court especially in Family Violence Restraining Orders. Having been admitted in 2017, she has also previously practiced in areas including but not limited to Criminal law, Immigration law and Protection and Care matters of the Children’s Court – experience which both motivates and benefits her passion in pursuing resolutions for her clients. It is Caroline’s endeavour that her client’s feel heard and understood by decoding and humanising the law and its role in each of her matters.
