If the Australian Taxation Office (ATO) believes that renovations to a property in the previous 5 years before a property is sold are "substantial improvements" to the property, then what is being sold is deemed to be a "different" asset/property to what existed before the work was done.

 

This means that you are selling a "new" property and new residential properties attract GST on the sale price, i.e. you will have to pay 10% of the sale proceeds to the Government.

 

The Goods and Services Tax Act defines "substantial renovations" of a building as:

 

 renovations in which all, or substantially all, of a building is removed or replaced. However, the renovations need not involve removal or replacement of foundations, external walls, interior supporting walls, floors, roof or staircase.

 

The definition is vague and anyone thinking of doing substantial renovations to their property before selling the property should obtain advice from their accountant or a legal professional before undertaking such work to ensure they are not liable to pay GST upon the sale of the property.