Information Centre · Family Law
Property Settlement in Australia: What Replaced the Former Four-Step Approach?
The 'four-step' description of property settlement is historical shorthand. From 10 June 2025 the Family Law Act 1975 (Cth) sets out the considerations directly in the statute — this article explains what is now required under s 79 for married parties and s 90SM for de facto parties.
Key points
- The 'four-step' description of property settlement is historical shorthand only, not the current framework. From 10 June 2025 the Family Law Act 1975 (Cth) sets out the required considerations in s 79 (married) and s 90SM (de facto) directly.
- The Court identifies the parties' existing legal and equitable rights, interests and liabilities in the property under s 79(3) or s 90SM(4). Superannuation is dealt with under Part VIIIB (or Part VIIIAB); interests in companies and trusts may be property or financial resources depending on control, benefit and structure.
- Contributions of all kinds are considered under s 79(4) or s 90SM(5), including financial and non-financial contributions, contributions to the welfare of the family (as homemaker or parent) and, where the law and evidence support it, the economic effect of family violence.
- Current and future circumstances of each party are considered under s 79(5) or s 90SM(6). The former framing that applied to property has been superseded.
- Under s 79(2) or s 90SM(3) the Court must be satisfied that any order altering interests is just and equitable in all the circumstances of the case. There is no fixed formula or presumption of equal or any other percentage.
- Agreed outcomes can be formalised by Consent Orders under s 79 or s 90SM, or by a Binding Financial Agreement under Part VIIIA or Part VIIIAB. Married applications must ordinarily be filed within 12 months of the divorce order taking effect (s 44(3); leave under s 44(4)); de facto applications within 2 years of the end of the relationship (s 44(5); leave under s 44(6)).
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Many older articles describe Australian property settlement as a 'four-step' process. That description is now historical shorthand only. This guide explains what the current statutory framework requires and why the previous shorthand should not be taken as an authoritative statement of the law.
'Four-step' as historical shorthand
Before the amendments taking effect on 10 June 2025, reasons under s 79 and s 90SM were commonly organised around four sequential steps (identify and value the pool; assess contributions; consider factors going to each party's needs and circumstances; and consider the just-and-equitable requirement). That structure was a judicial ordering device, not a statutory formula. The provisions previously organising that shorthand as they applied to property have been superseded by the current framework, and it is incorrect to present the 'four-step' description as current law.
Current framework (s 79 / s 90SM)
Under the current framework the Court considers, in respect of any property proceedings between married or de facto parties:
- the existing legal and equitable rights, interests and liabilities of the parties in the property, under s 79(3) or s 90SM(4);
- contributions of all kinds, under s 79(4) or s 90SM(5);
- each party's current and future circumstances, under s 79(5) or s 90SM(6); and
- whether any order altering interests is just and equitable in all the circumstances, under s 79(2) or s 90SM(3).
These considerations are not a mandatory sequence and are not weighted by any fixed percentage.
Existing rights, interests and liabilities
Identification and reliable valuation of the parties' existing rights, interests and liabilities is a precondition to a principled decision. This includes real and personal property, superannuation (dealt with under Part VIIIB or Part VIIIAB), interests and controlling interests in companies and trusts, liabilities, contingent liabilities and third-party rights. Full and frank disclosure applies under the Federal Circuit and Family Court of Australia (Family Law) Rules 2021.
Contributions
Contributions under s 79(4) or s 90SM(5) include financial contributions, non-financial contributions (including preservation, improvement and management of property), contributions to the welfare of the family (including as homemaker or parent) and, where the law and evidence support it, the economic effect of family violence. Contributions can be direct or indirect and can be made before, during or after the relationship.
Current and future circumstances
The Act lists the matters the Court considers about each party's current and future circumstances. These may include age and health, care of any child under 18, earning capacity, financial resources, standard of living, the effect on capacity to earn or acquire property, and any other matter the Court considers relevant. The former framing that applied to property is no longer the applicable test.
Just and equitable
Section 79(2) (and s 90SM(3) for de facto parties) requires the Court to be satisfied that any order altering interests is just and equitable in all the circumstances. Because it is a substantive requirement and not merely a final check, an order altering interests will not be made unless the requirement is met.
Formalising outcomes
Agreed outcomes can be formalised by Application for Consent Orders under s 79 or s 90SM, or by a Binding Financial Agreement under Part VIIIA (married) or Part VIIIAB (de facto). Contested matters proceed under the Federal Circuit and Family Court of Australia's pre-action procedures, disclosure regime and case management directions.
When to obtain advice
Obtain advice before signing any agreement, transferring assets, refinancing or dealing with third parties, and well before any time limit approaches. See our related guides on property settlement and Consent Orders.
Frequently Asked Questions
Is the 'four-step' process still the law?
No. The 'four-step' phrase is historical shorthand for the way courts previously structured reasons under s 79 and s 90SM. From 10 June 2025 the Family Law Act 1975 (Cth) sets out the required considerations in the statute itself. The Court must identify the parties' existing legal and equitable rights, interests and liabilities in the property, consider contributions and current and future circumstances under ss 79(4)–(5) (or the de facto equivalents in s 90SM) and be satisfied under s 79(2) or s 90SM(3) that any order altering interests is just and equitable in all the circumstances.
Is property divided 50/50 in Australia?
No. There is no fixed percentage, formula or presumption in the Family Law Act 1975 (Cth). Every case is assessed on its own facts under s 79 or s 90SM.
Does the Court have to make an order altering property?
No. The Court is not required to make any order that alters existing interests. Under s 79(2) and s 90SM(3), an order altering interests may only be made if the Court is satisfied it is just and equitable in all the circumstances.
What are 'contributions' under the current framework?
Contributions include financial contributions, non-financial contributions, contributions to the welfare of the family (as homemaker or parent), and — where the current law and evidence supports it — the economic effect of family violence. Contributions can be direct or indirect and can be made before, during or after the relationship.
What are 'current and future circumstances'?
The Act now lists the matters the Court considers about each party's current and future circumstances, including age and health, care of children, earning capacity, financial resources, standard of living and the effect of any proposed order. The former framing that applied to property has been superseded.
Do superannuation, businesses and trusts have to be dealt with?
Superannuation is treated as property under Part VIIIB (and Part VIIIAB for de facto parties) and is dealt with under separate rules. Interests in companies and trusts may be property or financial resources depending on control, benefit and structure; third-party rights and joinder rules under the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 apply.
What is the just-and-equitable requirement?
Under s 79(2) (married) and s 90SM(3) (de facto) the Court must be satisfied that any order altering interests is just and equitable in all the circumstances of the case. It is a substantive requirement, not a discretionary tie-breaker after a percentage has been chosen.
How is the process progressed if we agree — or if we do not?
Agreed outcomes can be formalised by Consent Orders (Application for Consent Orders under s 79 or s 90SM) or by a Binding Financial Agreement under Part VIIIA or Part VIIIAB. If proceedings are commenced, the pre-action procedures, duty of disclosure and case-management directions of the Federal Circuit and Family Court of Australia apply.
What are the time limits?
Married parties must ordinarily apply within 12 months of the divorce order taking effect (s 44(3)); leave to apply out of time is required under s 44(4). De facto parties must ordinarily apply within 2 years of the end of the relationship (s 44(5)); leave is required under s 44(6).
When should I obtain advice?
Obtain advice before signing any agreement, transferring or dealing with assets, refinancing, or responding to enforcement or third-party claims, and well before any applicable time limit approaches.
How Parke Lawyers Can Help
Parke Lawyers acts for separating couples across Australia on each step of the property adjustment framework under sections 79 and 90SM as amended with effect from 10 June 2025 — identifying the asset pool, assessing contributions, weighing current and future circumstances, and testing whether the proposed outcome is just and equitable — through our Family Law team. Engage us early so disclosure, valuation and the balance sheet can be framed properly from the outset.
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Speak with Parke Lawyers
Our team can advise on how the current s 79 and s 90SM framework applies to your circumstances, from identification and disclosure through to Consent Orders or a Binding Financial Agreement.
This article is general information only and does not constitute legal advice. Please obtain advice tailored to your circumstances.