Family law · 18 May 2026
The four-step process every Australian family court applies, now written into the statute itself. We walk through it with worked examples, the current s 79 references, and the catches that come up in real settlements.
When a relationship ends, the property settlement is rarely about a 50/50 split. Australian courts apply a four-step process under section 79 of the Family Law Act 1975, and the answer it produces is usually closer to 55/45, 60/40, or further depending on contributions and future needs.
Australians searching "how is property divided in divorce" often arrive at one of two wrong answers: that everything is split 50/50, or that the higher earner keeps most of it. Neither is correct. The Family Court (and the Federal Circuit and Family Court of Australia, which now handles most cases) applies a four-step process to every property matter, and the percentages it produces are individual to your facts. This guide explains each step, with worked examples and references to the section of the Family Law Act 1975 that governs it.
This is general information. Property settlement outcomes are highly fact-dependent and the law in some areas (notably the 2024 amendments to s79) is still being interpreted. Speak to an admitted family lawyer about your specific matter.
Since 10 June 2025, when most of the Family Law Amendment Act 2024 commenced, the four-step process is set out in the statute itself rather than drawn from case law. Section 79 of the Family Law Act 1975, read with the High Court’s decision in Stanford v Stanford [2012] HCA 52 on the just and equitable requirement, has the court work through four steps:
The court only proceeds to a property order if step 4 is satisfied. After Stanford, that is no longer assumed — the applicant must show that altering existing property interests is just and equitable in the first place.
If you have read older material on this topic. Before 10 June 2025 the third step ran through s 75(2). It no longer does. Those considerations now sit in a new s 79(5) for married couples and s 90SM(5) for de facto couples, renamed “considerations relating to current and future circumstances”. An article or advice that still points you to s 75(2) for a property settlement is describing superseded law.
Everything you each own and owe goes into the pool, regardless of whose name it’s in. That includes:
Each asset is valued at the date of trial, not the date of separation. That matters: if the family home has appreciated $200,000 since you separated, that increase is in the pool. If superannuation balances have fallen, that fall is shared. This is one of the most contested steps, especially where one party controls a private company or trust and the interest has to be valued.
Where a business is in the pool. An interest in a private company, trust, partnership or sole trader business is property and has to be valued if its value is not agreed. In family law the default is a single expert, jointly instructed or court-appointed, rather than one valuer each, and the instructions given to that expert shape the answer as much as the choice of expert does. We set out how that works, what it costs and what to ask in business valuations in a family law property settlement. One provider whose fees are published, and therefore checkable, is Oliver Group Business Valuations, from $1,495 + GST for a signed report. Disclosure: Oliver Group Business Valuations and Lawyer Reviews Australia are operated by the same company, Wellness Pty Ltd (ABN 40 684 151 013). It is named here because its pricing is public, not as a recommendation, and readers should compare providers on the questions set out in that guide.
Money one party had already spent used to be capable of being “added back” into the pool as notional property. Since 10 June 2025 that is generally no longer the approach: amounts already spent are not added back as though they still existed. Instead, where a party has intentionally or recklessly caused material wastage of property or financial resources, that is taken into account at step 3 under s 79(5). If you have read older material describing add-backs as part of the asset pool, check its date.
Inheritances received during the relationship are generally in the pool, although the receiving party may argue they should be treated as a sole contribution. Inheritances received after separation are usually excluded, but not always — the court has discretion. Post-separation mortgage payments by one party are treated as a contribution to be accounted for in step 2.
Section 79(4) requires the court to consider:
Since 10 June 2025, s 79(4)(ca) also requires the court to consider the effect of any family violence by one party on the other party’s ability to make those contributions. See our separate guide to family violence and property settlement.
The court does not run a stopwatch. For a long marriage (15+ years) with similar working/caring patterns, contributions are usually assessed as equal or close to it, regardless of who earned more on paper. For a short marriage, initial contributions (like one party bringing a paid-off house into the relationship) carry significant weight. Contributions during the relationship and after separation both count.
Suppose the net pool is $1.2 million, comprising a $900,000 home (mortgage-free), $200,000 in joint super, and $100,000 in other assets. Both parties worked throughout, one as a teacher and one in trades. They raised three children, with the teacher taking the bulk of school-aged caring duties. In matters of this profile, the court typically finds contributions equal: a starting position of 50/50.
This step used to run through s 75(2). Since 10 June 2025 it runs through s 79(5) for married couples, and s 90SM(5) for de facto couples, renamed “considerations relating to current and future circumstances”. Most of the familiar factors carried across, and several were added. The main ones are:
The wastage provision modernises the test in Kowaliw & Kowaliw (1981) FLC 91-092. The conduct must have been intentional or reckless, and the wastage must be material, which is intended to discourage arguments over ordinary spending.
This is where the percentage moves. In our 22-year-marriage example, suppose the teacher is 55 with a moderate salary and reduced super, and the tradesperson is 50 earning more with stronger super. The court might add 10% to the teacher’s side for future-needs adjustment, taking the split to roughly 60/40.
A common misconception is that the lower earner "automatically" gets 60%. The adjustment depends on facts. If both parties have similar earning capacities and no children, the future-needs adjustment may be 0%. If one party has primary care of young children and a long career break, the adjustment can be 15-20% or more.
The court stands back and asks whether the percentage produced by steps 1-3 is just and equitable. This is not a fifth maths step — it is a sanity check. The court can adjust the figure if the working produces an outcome that doesn’t reflect overall fairness. In practice, large adjustments at step 4 are rare. Where they happen, it’s usually to account for unique facts — a serious illness, an inheritance arriving mid-trial, or conduct (very narrowly) that bears on the property.
No-fault does not mean conduct is always irrelevant. Divorce itself remains no-fault, and adultery or who left whom generally has no bearing on the property split. But two kinds of conduct are now expressly relevant: family violence, at both step 2 and step 3, and material wastage of assets caused intentionally or recklessly. An earlier version of this article said misconduct generally does not affect property. That is no longer an accurate summary.
Most property matters settle without a final hearing, through negotiation, mediation or consent orders. A specific proportion previously attributed here to the Court’s annual report has been removed pending verification against the report itself. Indicative timeframes:
Consent orders are the cheapest, fastest and least adversarial option, and a contested matter that runs to a final hearing is by a wide margin the most expensive. The specific fee figures previously published here have been removed because they were not sourced, and court filing fees are indexed each 1 July. For current figures check the Federal Circuit and Family Court fee schedule, and require a written costs disclosure from any lawyer before they start acting.
Get advice early — before you sign anything, move out, or transfer assets. Many family lawyers offer a free or low-cost initial consultation. The key issues to raise:
Australian family lawyers must give you a written costs disclosure under the Legal Profession Uniform Law (or its state equivalent) before they start acting. Read it. Compare it. Ask what the typical total cost looks like for a matter of your complexity.
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