When separating couples in Australia reach the point of dividing their property, the process is far more nuanced than a simple 50/50 split. The assessment is governed by the Family Law Act 1975 (Cth), and a key component of this determination is section 75(2) Family Law Act. This section contains a comprehensive list of factors that the Federal Circuit and Family Court of Australia (FCFCOA) must consider when deciding what ultimate division of property (the “just and equitable” outcome) should be ordered, and whether to grant spousal maintenance. These factors focus entirely on the parties’ ‘future needs’ post-separation. Understanding this section is critical because it is the mechanism through which the Court can adjust the percentage division of assets (the property pool) to compensate a party who is left in a disadvantaged financial position due to the breakdown of the relationship. From my experience, a successful property settlement strategy must include a robust and well-evidenced argument based on these future needs considerations.
Featured Definition: Section 75(2) Family Law Act
Section 75(2) Family Law Act (Cth) is the legislative provision detailing the numerous matters the FCFCOA must take into account when determining an application for spousal maintenance and, by extension (via Section 79(4)(e)), when deciding on a final property settlement division. These factors relate primarily to the parties’ current and future financial capacity, health, and responsibilities (known collectively as ‘future needs’), ensuring a fair final distribution.
The Dual Role of Section 75(2) Family Law Act in Australian Family Law
The wording of section 75(2) Family Law Act technically addresses the criteria for spousal maintenance. However, its influence is significantly broader, making it a cornerstone of the entire financial resolution process.
Role 1: Determining Spousal Maintenance
The primary purpose of section 75(2) Family Law Act is to guide the Court when determining if one party should pay financial support (spousal maintenance) to the other.
A spouse or former de facto partner may be eligible for maintenance if:
- They cannot adequately meet their reasonable needs (either because of their health, age, or inability to secure employment).
- The other party has the capacity to pay that support.
Section 75(2) provides the exhaustive list of considerations the FCFCOA must examine to establish both the need and the capacity to pay. Without satisfying the Court on these factors, no spousal maintenance order can be made.
Role 2: Adjusting Property Settlement Percentages (Future Needs)
In property settlement proceedings, the Court follows a four-step process. Section 75(2) Family Law Act is formally incorporated into Step 3, which assesses the future needs of each party.
The judicial process requires the Court to:
- Identify and Value: Determine the net asset pool.
- Assess Contributions (Section 79(4)(a-c)): Determine the percentage split based on financial, non-financial, and homemaker/parent contributions (e.g., a 55/45 split in favour of the wife).
- Adjust for Future Needs (Section 79(4)(e) referencing Section 75(2)): Review the section 75(2) Family Law Act factors and adjust the initial contributions percentage to reflect the future disparity in the parties’ financial capacity post-separation (e.g., adjusting the 55/45 split to 60/40 in favour of the wife).
- Just and Equitable: Step back and ensure the final dollar outcome is fair.
Therefore, section 75(2) Family Law Act is the legislative tool that allows the Court to compensate the party with the lesser ability to earn income or the greater ongoing responsibilities. This is a common mechanism to address the long-term impact of career sacrifices made during the relationship.
Detailed Breakdown of Key Section 75(2) Family Law Act Factors
The section contains a lengthy list of specific matters the Court must consider, but some are far more influential in practice than others.
| Key Section 75(2) Factor | Legislative Sub-Section | Practical Application (Future Needs Adjustment) |
| Age and Health | (a) | A party who is older or in poor health, which significantly impacts their ability to work until retirement, often receives an adjustment to compensate for reduced future earning capacity. |
| Income, Property, and Earning Capacity | (b) | The most common factor. Where there is a significant disparity in earning capacity (e.g., one party earns $150k, the other earns $40k), the lower-earning party will likely receive an adjustment. |
| Care of Children Under 18 | (c) | The party who is the primary caregiver of children under 18 generally receives an adjustment, as their ability to work full-time or travel for work is restricted. This also acknowledges the cost of providing housing for the children. |
| Duration of the Marriage’s Effect on Earning Capacity | (k) | If one party took substantial time out of the workforce (a “career break”) to raise children, leading to reduced superannuation and lost career progression, this factor is relied upon heavily for an adjustment. |
| Financial Circumstances of New Cohabitation | (m) | If either party is now living with a new partner, the new partner’s financial contribution to that party’s expenses (e.g., rent, utilities) may be considered, reducing the party’s ‘needs.’ |
| Terms of Child Support | (na) | Any existing or potential child support liability is considered. If one party is paying child support, their ability to meet other needs is reduced, and vice versa for the receiving party. |
| Impact of Family Violence | (aa) | This recent inclusion ensures the Court considers the effect of family violence on any of the other factors, especially a victim’s ability to earn an income or manage property. |
From my experience, it’s not simply the existence of these factors that matters, but the degree and the nexus (connection) between the factor and the loss of earning capacity caused by the marriage. The adjustment is discretionary and there is no strict formula; it is typically expressed as a percentage range (e.g., 5% to 15% adjustment).
Actionable Compliance: Using Section 75(2) Family Law Act Strategically
Successfully leveraging section 75(2) Family Law Act requires more than just claiming you have a greater need; it demands detailed evidence that complies with the FCFCOA’s administrative requirements.
Checklist for Evidencing Future Needs
- Health Records: For factor 75(2)(a) (health), provide current medical reports or letters from specialists confirming any chronic or ongoing condition that restricts your ability to work.
- Earning Capacity Evidence: Obtain employment records, CVs, and, where relevant, a Vocational Assessment Report from an expert to quantify the difference between your current earning capacity and what it would have been had you not taken career breaks (75(2)(b), (k)).
- Child Care Schedules: Provide current, verifiable parenting orders or agreements detailing the percentage of care for factor 75(2)(c). This is the factual evidence of your ongoing parental responsibilities.
- Financial Statements: For factor 75(2)(b) (income), provide your last three years of tax returns, bank statements, and a detailed summary of your current income and expenses.
- Child Support Assessment: Include the latest assessment notice from Services Australia (Child Support) to prove the existence and amount of any liability or entitlement (75(2)(na)).
The Distinction: Contributions vs. Future Needs
A core area of confusion for Australian litigants is distinguishing between Step 2 (Contributions) and Step 3 (Future Needs based on section 75(2) Family Law Act).
| Characteristic | Contributions (Step 2 – Section 79(4)(a-c)) | Future Needs (Step 3 – Section 75(2)) |
| Focus | Retrospective (Looking back) | Prospective (Looking forward) |
| Basis | What each party put into the property pool and the welfare of the family. | The needs of each party after separation and the capacity to meet those needs. |
| Example | Time spent caring for children during the marriage (homemaker contribution). | Primary care of children post-separation and the impact this has on one’s ability to work. |
A common strategy is to argue that the homemaker role was a contribution (Step 2) and that the continuing primary care of the children after separation, resulting in reduced earning capacity, is a future need (Step 3/S.75(2)), often leading to a double benefit for the primary caregiver.
People Also Ask (PAA) about Section 75(2) Family Law Act
Q1: Does Section 75(2) apply to de facto relationships in Australia?
Yes, the equivalent provisions for de facto relationships are contained in Section 90SF(3) Family Law Act 1975. This section mirrors the exhaustive list of factors found in section 75(2) Family Law Act, ensuring that future needs are considered in the same way for de facto property settlements as for married couples.
Q2: Can I apply for spousal maintenance if I received a large property settlement?
The terms of the property settlement are a mandatory factor considered under section 75(2)(n) Family Law Act. If you receive a large, beneficial property settlement (e.g., retaining the family home debt-free and a significant cash payment), this may satisfy your reasonable needs, making an application for ongoing spousal maintenance unlikely to succeed.
Q3: What is the maximum adjustment percentage the Court can make under Section 75(2)?
There is no maximum percentage specified in section 75(2) Family Law Act. The adjustment is entirely discretionary. While adjustments in the range of 5% to 15% are common, the Court has made much higher adjustments in very long marriages where one party has zero future earning capacity or very specific, high-cost health needs.
Q4: Is the standard of living during the marriage a factor in Section 75(2) Family Law Act?
Yes, section 75(2)(g) requires the Court to consider the standard of living that is reasonable in the circumstances, which is generally benchmarked against the standard of living the parties enjoyed during the marriage. This factor guides the Court’s assessment of what constitutes the receiving party’s ‘reasonable needs.’
FAQs: Expert Insights on Section 75(2) Strategic Use
Q1: How does a party’s expected inheritance affect the Section 75(2) assessment?
An expected inheritance is not property until it is received. However, if the inheritance is “sufficiently proximate” (e.g., the testator is elderly and frail or has lost capacity), it may be considered a ‘financial resource’ under section 75(2)(b). The Court may reduce the future needs adjustment for the party expecting the inheritance, as their future financial position is considered stronger.
Q2: Can ‘wastage’ or reckless disposal of assets be considered under Section 75(2)?
While wastage is primarily a contribution issue (often resulting in an ‘add-back’ to the pool), the ultimate effect of that wastage on the diminished pool and the parties’ current financial circumstances can be taken into account under the ‘catch-all’ factor section 75(2)(o). The Court can consider “any other fact or circumstance which… the justice of the case requires to be taken into account.”
Q3: If a party intentionally reduces their income after separation, how does the Court apply Section 75(2)?
If the Court finds a party has been deliberately or unreasonably underemployed, it may impute an income to that party. The Court will then apply section 75(2)(b) using the higher, imputed income amount when assessing that party’s capacity for appropriate gainful employment. This prevents parties from manufacturing a ‘need’ for an adjustment.
Q4: Does a prenuptial agreement (Binding Financial Agreement) exclude the consideration of Section 75(2) Family Law Act?
No, a Binding Financial Agreement (BFA) must be considered under section 75(2)(p). However, a properly drafted BFA can contractually exclude or limit spousal maintenance, effectively removing most of the section’s relevance for maintenance. For property settlement, the BFA’s terms are always considered as a starting point, but the Court retains the power to set the BFA aside if, for instance, it was obtained by fraud or undue influence.
Q5: How does one prove the long-term effect of the marriage on earning capacity (s 75(2)(k))?
Proving this requires more than just claiming time off work. It involves providing evidence that you gave up specific career opportunities, that there is a discernible gap between your current earnings and the other party’s earnings (the income-earning disparity), and that your time away led to a demonstrable loss of specific skills, professional networks, or superannuation capital. This evidence links the past decision to the present future need.
Conclusion: Strategic Advantage Through Future Needs Assessment
The section 75(2) Family Law Act is the most powerful legislative tool for ensuring that Australian family law property settlements are truly fair and account for the long-term consequences of a marital breakdown. It is the key to arguing for an adjustment to the basic contribution-based percentage, ensuring the party with the greater needs—whether due to age, health, childcare responsibilities, or a diminished earning capacity—is adequately compensated.
Understanding and strategically proving the section 75(2) Family Law Act factors with verifiable evidence is not merely administrative; it is your fundamental pathway to securing your financial future.
To receive a strategic assessment of your property settlement entitlement based on the crucial Section 75(2) factors, secure expert guidance from our team by visiting our Family Law Services Page.