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Are There Penalties for Hiding Assets in Divorce in Australia? (Ensure Compliance)

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When a separating couple’s loss of trust becomes unbearable, it can aggravate property settlement proceedings. One party may become suspicious the other is hiding assets. They may also know less about the relationship’s financial aspects than their former partner.

In this article, we’ll examine how assets can be hidden and the penalty for hiding assets in divorce.

What Is the Penalty for Hiding Assets in Divorce Australia?

Consequences for Hiding Assets

The Court will impose penalties on a party found to have hidden assets during a property settlement. Depending on the circumstances, the Court may do any of the following.

Contempt of Court

Contempt of Court is the willful disobedience or disregard of court orders or the Court’s authority. An individual can be found in contempt of Court if they deliberately fail to disclose assets or provide false information about their financial situation. This is something they are legally required to do.

There are serious consequences for this breach. The offending party may face fines or even imprisonment in extreme cases.

Cost Orders

Cost orders refer to the Court’s decision to require one party to pay the legal costs incurred by the other party. Generally, each party bears their legal costs in a family law case. However, in cases where the conduct of one party has caused additional legal expenses for the other party, the Court may make an exception.

Usually, lawyers use the scales of costs for the relevant Court to determine what to charge. If the respondent disputes the cost, the Court can appoint a costs assessor. This independent person will consider the objections and decide on a fair amount.

Adverse Inferences

If the Court finds you skewed the asset pool through non-disclosure, it may draw adverse inferences. The Court must decide how to handle undisclosed, unvalued financial resources.

The evidence of undisclosed assets often suggests their value. For example, losses documented on a gambling site or unusual investment activity can indicate a value the Court can rely on. The Court may also consider circumstances like a luxurious lifestyle that suggests a broad monetary value.

The respondent may complain that the Court overestimated the value of the concealed assets. However, the Court is typically unsympathetic to these complaints. It’s more concerned with the aggrieved party being properly compensated.

penalty for hiding assets in divorce in australia

How Do Parties Hide Assets?

There are several ways a party to a divorce can hide assets.

Transferring Assets

Transferring assets involves moving ownership of property, money, or investments from personal possession into someone else’s. This will often be a trusted friend, family member, or business associate. This strategy prevents these assets from being considered in the settlement and protects them from division or claim by the other spouse.

There are several ways to transfer assets, including:

  1. Transferring money to another person’s bank account;
  2. Signing over the titles of vehicles, real estate, or other property;
  3. Transferring stocks, bonds, or shares in a business.

The individual who transferred the assets may deny the existence of these assets or claim they were lost, spent, or never existed. The party will then reclaim the assets after the property settlement is finalised.

Transferring Assets

Investing in Assets That Are Difficult to Value

This strategy involves buying items or investments that are not easily appraised or whose value is not readily apparent. The primary goal is to obscure their true worth. This makes it challenging for the other spouse or legal professionals to assess and divide them accurately during the divorce.

Some assets used for this purpose may include:

  • Artwork and antiques;
  • Rare collectibles (coins, stamps, vintage cars);
  • Jewellery and precious stones;
  • High-end wines or spirits;
  • Intellectual property rights;
  • Over-the-counter (OTC) securities or non-publicly traded stocks.

These assets are often purchased without the other party’s knowledge. Depending on the asset, they may be concealed in a storage facility or secret offshore accounts. This makes them hard to trace.

The value of these assets can be highly subjective or fluctuate significantly. They may also be difficult to liquidate, making them more complex to deal with in a settlement.

Investing in Assets That Are Difficult to Value

Delaying Promotions or Bonuses

Individuals may collaborate with their employer to postpone receiving increased income or bonuses until after the settlement is finalised. This minimises the individual’s apparent income and assets during the divorce. This tactic reduces the amount that the other spouse can claim.

The party can delay promotions or bonuses by:

  • Holding off on signing official documents related to the promotion or raise;
  • Deferring bonus payments to a future date;
  • Temporarily reducing the number of working hours or taking unpaid leave to show a decrease in income.

Artificially reducing earning capacity can affect child support, spousal maintenance calculations, and asset division. After the settlement, the party may receive their bonus as a lump sum or begin in a higher-paid position.

Delaying Promotions or Bonuses

Full and Frank Financial Disclosure of Assets

The Family Law Act requires that the parties to a property dispute provide “full and frank” disclosure. Failing to do so can result in severe penalties and further costs.

All Family Law Property Proceedings parties are under a “duty of disclosure”. Parties provide all the relevant financial information and documents during the disclosure process. This disclosure will include information that the other party may not know. This documentation contains information recorded on paper or stored by other means, such as in a computer storage device.

The obligation requires disclosing all sources of income and property interests, whether currently owned or disposed of by sale, transfer or gift before the parties divorced. Other financial resources held in the party’s name or owned by companies, trusts or other structures under which the party derives a benefit are also subject to disclosure.

Disclosure of Financial Circumstances requires that each party complete Financial Statements. This provides details of all assets, liabilities, and financial resources in their name or held jointly with another party. The rules also require that parties file an amended Financial Statement if their financial circumstances significantly change during negotiations and proceedings.

Each party can request relevant documents from the other party – these may include:

  • Bank Statements
  • Superannuation Statements
  • Tax Returns and Pay Slips
  • Property Valuations
  • Insurance Policies
  • Share Certificates
  • Trust Deeds
  • Business, Partnership or Company documents
  • Title Deeds and Leases of Property

Failing to comply with this Court Order is a severe offence for which there is a range of penalties from the courts, from fines to jail time.

When parties agree to a property settlement or the Court makes an order concerning the division of their property, the agreement or court order is binding. Neither party can generally attempt to “revisit” the outcome at a future date.

Full and frank disclosure by parties to the proceedings generally means they can negotiate (or the Court can make orders) over an accurate property pool. This enables a fair division.

ouple discussing about Full and frank financial disclosure of assets

To gain more knowledge about the division of assets in Australia, read this blog: How Are Assets Divided in a Divorce Australia?


Hidden assets can be a severe issue in financial settlements. There are several ways a party can hide a financial resource. However, if non-disclosure is discovered during court proceedings, there can be a significant penalty for hiding assets in divorce. The bottom line is that following your duty to disclose honestly and transparently is best.

There are many possible twists and turns in gaining full disclosure. We recommend seeking professional advice and assistance to ensure a fair and equitable outcome. 

If you need help with family law matters, contact us for a free discovery call.

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Luke Shanahan Family Law

Luke Shanahan


Luke Shanahan is the Principal Solicitor of Shanahan Family Law. Luke has been practising family law since 2008 and started his firm in 2014. He has three beautiful daughters and a supportive, gorgeous wife. In his spare time, Luke enjoys playing tennis and trips to the beach with family and friends. 

Luke is dedicated to providing the best possible legal representation for his clients. His experience and passion for family law set him apart from other solicitors. You only have to read their 5-star reviews to understand that.

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