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Addbacks under the Family Law Amendment Act 2024

Published May, 2025

The treatment of addbacks in family law matters is changing from 10 June 2025. These changes aim to provide clearer guidelines for the division of property, particularly concerning the treatment of ‘addbacks’. How will these changes affect you?

What is an addback?

In family law property settlements, ‘addbacks’ refer to property that one or both parties owned at some stage but which has been dissipated or removed from the matrimonial pool prior to separation, and is sought to be ‘notionally’ added back in. This can include funds spent on gambling, gifts to third parties, or other expenditures that reduce the overall value of the property pool available for division. Courts may ‘add back’ these dissipated amounts to the property pool to ensure a just and equitable distribution.​

Case law has evolved over the years since the Family Law Act took effect in 1975 to accept the treatment of addbacks in the following categories:

  1. The wastage of assets

Generally, the Court considers “that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:

(a) where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or

(b) where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.”

In wastage cases, the extent to which the wastage of either party of assets is taken into account is a matter for discretion.

  1. The premature disposal of assets

A premature distribution of a proportion of the matrimonial assets occurs when one party distributes to themselves an asset in which the other party had a legitimate interest. The court would consider it unjust that one party has the sole benefit of marital assets to the exclusion of the other when that asset should be brought into the balance sheet and dealt with accordingly. The court takes the view that the correct way in which to deal with one party’s disposal and receipt of funds is to bring them into the pool of assets on a notional basis and make a distribution accordingly.

  1. Accounting for expenditure on legal fees

When considering whether legal fees should be included on the balance sheet as an addback, regard is had to the source of the funds. If the payment of legal fees came from joint funds which were acquired during the relationship, they should be included as a notional addback to the party who has had the benefit of the funds.

If funds used to pay legal fees have been generated by a party post-separation from their income or by way of gift or inheritance, they would not generally be included as an addback on the balance sheet.

Key reforms affecting addbacks

The amendments to the Family Law Act 1975, bring several changes that impact how addbacks are treated in property settlements:

  1. Codification of Addbacks: The Act codifies the circumstances under which addbacks should be considered, providing clearer guidance for courts and practitioners. ​

  2. Wastage addbacks: Under the new Family Law Amendment Act, the court must take wastage into account as part of assessing ‘current and future circumstances’. It is now found under the new s79(5)(d) “the effect of any material wastage, caused intentionally or recklessly by a party to the marriage, of property or financial resources of either of the parties to the marriage or both of them” when considering any adjustment for current or future circumstances. It is not intended that this factor would displace existing case law concerning the treatment of wastage as a negative contribution.

    The Explanatory Memorandum (EM) draws attention to this by saying, “New paragraph 79(5)(d) will be considered as part of an assessment of the current and future circumstances of the parties … when appropriate, given the wastage may be better understood in terms of its impact on the financial future of the party, rather than as a negative ‘contribution’.” (p45)

    In order to successfully make a claim about wastage, the party must not only demonstrate that there has been wastage, but that there has been an effect of that wastage on the property or financial resources of either of the parties. The new factor specifically refers to material wastage that is caused intentionally or recklessly.

  3. Legal costs as an addback: The inclusion of legal fees as an addback will change under the new amendments. Legal fees may only be able to be dealt with under s.79(5)(v): “any other fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account.” A complication is that this is now a catch-all that only applies to present and future circumstances.

Conclusion

The Family Law Amendment Act 2024 will change the way that addbacks are dealt with – both practically (in terms of a move away from a balance sheet exercise) and on the outcomes that litigants achieve (as these matters will not likely be accounted for dollar for dollar).

Need help with the treatment of addbacks under the new legislation?

The information contained in this article is general in nature, and does not take into account the circumstances of your situation. Please reach out to one of our lawyers to discuss how addbacks might best be dealt with to advance your case.