When a relationship ends, one of the most important issues is how property, liabilities, superannuation and financial resources will be divided. In Australia, property settlement is not based on an automatic 50/50 split. The Court does not apply a fixed formula. Instead, it considers what outcome is just and equitable in the circumstances of each case.
For married couples, the relevant property settlement provision is s 79 of the Family Law Act 1975 (Cth). For de facto couples, the equivalent provision is s 90SM. The principles are substantially similar.
From 10 June 2025, amendments to the Family Law Act 1975 (Cth) took effect. The Family Law Amendment Act 2024 (Cth) introduced these changes. They created a clearer legislative framework for property settlement after separation. The reforms also expressly recognise issues that may have a significant financial impact. These include family violence, economic abuse, material wastage, liabilities and children’s housing needs.
Is it just and equitable to make an order?
Before the Court can alter the parties’ property interests, it must be satisfied that it is just and equitable to make an order. The end of a relationship does not automatically mean the Court will interfere with legal ownership of property.
Under section 79(2) of the Family Law Act 1975 (Cth), the Court must not make an order altering property interests unless it is satisfied that it is just and equitable to do so. The equivalent provision for de facto partners is s 90SM(3). The June 2025 amendments clarify that this question is not simply a final check. The just and equitable requirement informs the whole decision-making process.
In most cases, the Court will approach property settlement by:
- identifying the property, financial resources and liabilities;
- assessing each party’s contributions;
- considering the parties’ current and future circumstances; and
- determining the final division of the property pool.
Step 1: Identifying the property pool
The first step is to identify which properties, liabilities, and financial resources exist. This may include the family home, investment properties, bank accounts, shares, companies, trusts, vehicles, inheritances, cryptocurrency, superannuation and other assets. Liabilities may include mortgages, credit card debts, tax liabilities, personal loans, business debts and other financial obligations.
The amended section 79(3) of the Family Law Act 1975 (Cth) now expressly provides that the Court is to identify the parties’ existing legal and equitable rights and interests in property, as well as their existing liabilities. The equivalent provision for de facto partners is s 90SM(3A).
This means the Court is concerned not only with what assets exist, but also with the broader legal and practical financial position of each party.
Financial disclosure
Proper disclosure is essential in every property settlement. Parties cannot properly negotiate or resolve a financial settlement unless they understand the true financial position, including assets, liabilities, income, financial resources, business interests and trust interests.
The June 2025 reforms elevate the duty of disclosure in property and financial matters. This duty applies from the time a party is preparing to commence a property or financial proceeding and continues until the matter is resolved.
Disclosure commonly includes bank statements, tax returns, payslips, and loan statements. It also includes credit card records, superannuation statements, company records, and trust documents. Other items include business financial statements, property valuations, and cryptocurrency records. Parties must also disclose inheritances, gifts, and any property sold, transferred or disposed of. Documents relating to debts and liabilities round out the disclosure requirements.
Failing to provide proper disclosure can have serious consequences. The Court may make costs orders, draw adverse inferences, take non-disclosure into account when determining the final property settlement, or impose other consequences for non-compliance.
Step 2: Assessing contributions
The Court then considers each party’s contributions. Contributions are not limited to income or whose name appears on title. The Court considers financial and non-financial contributions, including contributions to the welfare of the family. These may include income earned during the relationship, mortgage repayments, and property owned at the start of the relationship. They also include inheritances, gifts, and renovations. Contributions extend to unpaid work in a family business, homemaking, and parenting. Caring responsibilities, managing household finances, and supporting the other party’s career, business or earning capacity also count.
The law recognises that caring for children, maintaining a household and supporting the other party’s career or business can be significant contributions, even where one party earned less income or did not earn income during the relationship.
Family violence and contributions
One of the most significant reforms in June 2025 is the explicit recognition of family violence in the assessment of contributions. The amended section 79(4)(ca) of the Family Law Act 1975 (Cth) provides that the Court may consider the effect of family violence on a party’s ability to make financial or non-financial contributions, or contributions as a homemaker or parent. The equivalent provision applies in de facto property proceedings under s 90SM.
This is important because family violence may affect a person’s ability to work, maintain employment, manage household responsibilities, participate in financial decision-making, care for children or otherwise contribute to the relationship.
Previously, the impact of family violence could be considered through case law. The reforms now place that consideration directly in the legislation.
Step 3: Current and future circumstances
After assessing contributions, the Court considers whether any further adjustment is warranted because of the parties’ current and future circumstances. These considerations include matters such as age, health, income, earning capacity, financial resources, care of children, responsibility to support another person, eligibility for pensions or superannuation benefits, and whether an adjustment would assist a party to retrain, study, establish a business or obtain adequate income.
The amended section 79(5) of the Family Law Act 1975 (Cth) now sets out a clearer list of current and future circumstances the Court may consider. Importantly, the June 2025 changes include specific reference to the economic effect of family violence, material wastage, liabilities and the need to provide appropriate housing for a child. The equivalent provision applies to de facto partners under s 90SM(5).
Family violence, economic abuse and future needs
The reforms more clearly recognise economic and financial abuse as a form of family violence. Under section 4AB of the Family Law Act 1975 (Cth), family violence includes behaviour that coerces, controls or causes a family member to be fearful. The June 2025 amendments more clearly recognise economic and financial abuse, including conduct that unreasonably denies a person financial autonomy.
In property settlement matters, section 79(5)(a) of the Family Law Act 1975 (Cth) permits the Court to consider family violence. It may look at the effect on the other party’s current and future circumstances. Family violence may affect career progression, physical or mental health, and earning capacity. It may also affect housing stability or financial independence after separation. This allows the Court to consider what occurred during the relationship. It can also weigh the ongoing financial consequences of that conduct.
Material wastage
The June 2025 reforms expressly allow the Court to consider material wastage where one party has intentionally or recklessly depleted property or financial resources under section 79(5)(d) of the Family Law Act 1975 (Cth). Examples may include reckless spending, gambling, deliberately dissipating funds, selling assets at an undervalue, or using joint resources for purposes unrelated to the relationship or family.
Not every poor financial decision will amount to wastage. The issue is whether the conduct was intentional or reckless, and whether it caused material wastage of property or financial resources.
It is also important to distinguish wastage from the former practice of treating some spent funds as “add-backs”. If money no longer exists, it will not necessarily be treated as an existing asset in the property pool. Instead, the Court may consider the conduct as part of the overall assessment, including contributions, wastage, liabilities and current and future circumstances.
Liabilities and housing needs
The amended legislation confirms that liabilities and housing needs are relevant to property settlement. Under sections 79(5)(e) and 79(5)(f) of the Family Law Act 1975 (Cth), the Court may consider liabilities incurred by either party. It may look at the nature of the liabilities and the circumstances in which they arose. Relevant factors include whether the liabilities were incurred for family purposes. The Court also considers whether one party received the benefit of the debt. It may examine whether the liability arose after separation. Another factor is whether the liability was connected with family violence or financial abuse. Finally, the Court considers the effect of the liabilities on each party’s financial position.
The Court may also consider the need to provide appropriate housing for a child under 18. This can be especially relevant where one party has primary care of children and needs stable accommodation close to school, family support, medical services or community connections. However, the need to house children does not automatically mean one party will retain the family home. The Court will consider the overall property pool, affordability, debt, each party’s housing options and the practicality of any proposed order.
Companion animals after separation
The June 2025 reforms introduce a specific framework for dealing with companion animals in property settlement matters. Although pets continue to be treated as property under the Family Law Act, the Court may now consider factors such as any actual or threatened abuse of the animal, the attachment of a party or child to the animal, and each party’s ability to care for the animal in the future.
The Court may order that one party have sole ownership, that the animal be transferred to another person with their consent, or that the animal be sold. However, the Court cannot make orders for shared ownership or shared care.
Step 4: Determining the final division
After considering contributions and current and future circumstances, the Court determines the final division of the net property pool. This may be expressed as a percentage division, such as 50/50, 55/45 or another outcome depending on the facts of the case. The Court then considers how that division should be implemented in practice. Final orders must be practical, enforceable, capable of implementation, and just and equitable.
Time Limits Still Apply
The June 2025 reforms did not remove the usual time limits for property settlement.
For married couples, property settlement and spousal maintenance proceedings must generally be commenced within 12 months after a divorce order takes effect.
For de facto couples, proceedings must generally be commenced within 2 years after separation.
A property settlement can be negotiated and formalised after separation and before divorce. Parties do not need to wait until they are divorced to resolve their financial affairs.
Why legal advice matters
The June 2025 reforms do not introduce a fixed formula for property settlement. The Court retains broad discretion to determine what is just and equitable in each case. However, the reforms provide a clearer decision-making pathway and give greater recognition to issues such as family violence, economic abuse, wastage, liabilities and children’s housing needs.
For separating couples, early legal advice is important. Careful preparation and evidence can significantly affect how contributions, future needs and the final property division are assessed.
Jake McKinley notes that this article is written for the purpose of providing generalised information and not to provide specialised legal advice. If you require qualified legal advice on anything mentioned in this article, our experienced team of solicitors at Jake McKinley are here to help. Please get in touch with us on 02 9232 8033 today to make an enquiry.
Article Written by Nadine Livingston, Law Graduate
