Family Law Update: Amendments to the property settlement provisions of the Family Law Act

Executive summary 

On 10 December 2024, the Family Law Amendment Act 2024 (Cth) was passed by the Australian Parliament. This legislation sets out a series of amendments to the Family Law Act 1975 (Cth) which apply to all separating couples, whether they are seeking to resolve their matter in contested court proceedings or outside the litigation framework. 

This tranche of amendments will change the law about: 

1. How the court will determine a property and financial settlement; and
2. What the court must consider when determining a property and financial settlement. 

Additionally, these changes will affect:

1. Children’s contact services; 
2. Case management and procedure of divorces and Family Dispute Resolution; 
3. Protecting sensitive information; 
4. Costs; 
5. Arbitration; 
6. Section 60I Certificates; 
7. Valuing superannuation interests. 

The focus of this article is the changes impacting property and financial settlements and we will delve into the other changes in another article. 

How will a property and financial settlement be determined? 

Since 2012, the pathway for determining a property and financial settlement was contained in a decision of the High Court of Australia, Stanford. This remains good law and the intention of the changes to the Family Law Act is to clarify the pathway and make it more accessible to litigants, and tweak aspects to improve the process. 

The new legislated pathway to determining a property and financial settlement will be as follows: 

1. Justice and equity: the court must consider whether it is just and equitable to make an order adjusting separated couples’ property interests; 
2. Identify each party’s assets, liabilities and financial resources: the court must identify each party’s legal and equitable interests in property, any liabilities or financial resources for which they have an interest (for example, being a beneficiary of a trust without a controlling interest of that trust);
3. Asses each party’s contributions: the court will assess each party’s contribution at 3 separate stages. Firstly, at cohabitation, secondly, during the relationship or marriage and thirdly, assess each party’s contributions post separation. At this stage, the court will allocate an overall percentage-based entitlement for each party, on the basis of their respective contributions; 
4. Current and future circumstances: where just and equitable, the court may depart from its assessment of contributions on the basis of a party’s current and future circumstances, only if it is just and equitable to do so. The changes specifically include family violence, wastage, liabilities and housing needs; and
5. Justice and equity: the court will determine the final overall percentage based entitlements of the parties and make orders to adjust the property in line with those entitlements. 

A crucial difference in the application of the new provisions is that the court is not required to follow the steps above in order. The court can engage with each step in any formation, with the goal of achieving a just and equitable division of property. 

Family violence as a consideration in a property and financial settlement?

The new changes expand the definition of ‘family violence’ to clearly recognise and include economic and financial abuse. The expansion of the definition is a welcome change and is important in the practical application of the new changes. 

In the assessment of contributions (step 3 above), the court will be required to consider family violence and the impact on a party’s ability to contribute to their relationship or marriage. 

Family violence as a consideration in spouse maintenance (or ‘alimony’)?

The new changes include amendment to the spouse maintenance provisions. 

The court will also be required to consider the impact of family violence in contested spouse maintenance proceedings. In doing so, the court will consider the economic effect of family violence, where it is alleged one party has subjected to or exposed the other party to family violence. 

Companion animals 

It has long been held that animals or pets are considered ‘property’ in the event of a relationship breakdown. 

The new changes scaffold these issues and empowers the court to make interim and final orders about a pet that meets the definition of a ‘companion animal’. This definition is also a new inclusion in the Act, being an animal that is kept primarily for companionship. Where an animal holds more than one purpose, it will be excluded from the definition. 

Importantly, the court cannot make orders for ‘shared care’ of the animal or pet, but can make orders for one party to have sole ownership, to transfer the ownership to another person with their consent, or that the animal or pet be sold. 

The ongoing duty to provide full and frank financial disclosure 

The purpose of the amendments on financial disclosure is to elevate the duty, highlighting its importance in property and financial settlements. 

The changes impose a new obligation on lawyers and family dispute resolution practitioners to make parties aware of their obligation to provide full and frank financial disclosure and encourage compliance. The parties must be informed of their duty and the possible consequences for failing to comply with that duty. 

Less adversarial approach 

The less adversarial approach is not a new invention but previously, this approach was only available to parenting proceedings where the parties consented. Property and financial settlements could only be included where parenting proceedings were also on foot. 

The new changes seek to clarify the court’s powers to actively manage proceedings through a less adversarial approach. The purpose is to resolve proceedings sooner, in a manner that reduces stress on the parties. The less adversarial approach also suspends portions of the Evidence Act, unless the court determines the rules of evidence should apply. 

The purpose of these changes is to empower the court to better case manage matters, facilitating a litigation process that meets the parties where they are. 

When do the changes start? 

The changes discussed in this article will come into effect on 10 June 2025.

Will you be subject to the new laws? 

All persons will be subject to the new laws when they come into effect. Save for, if you are a litigant in contested court proceedings and your final hearing has already commenced. 

For example, if your matter is listed for a 4-day final hearing which commences on 9 June 2025, the earlier provisions will apply to your matter. If your final hearing commences on 10 June 2025 or any date thereafter, the new provisions will apply to your matter. 

Further information  

Should you have any questions about the new changes and how they may affect your property and financial settlement, please contact our team on (02) 7259 4130.