Selling clothes on Depop? Here's what the ATO expects and how to stay on top of your tax obligations.
Selling a handful of old clothes you no longer wear is a hobby — and isn't taxable. But when you start buying clothes specifically to resell at a profit, sourcing from op shops or wholesale, and running your Depop shop like a business, the ATO sees it differently. The line between hobby and business comes down to intention, regularity, and commercial activity.
If you're listing multiple items per week, tracking what sells, adjusting your pricing, and reinvesting your profits into more stock, you're running a business. This is true even if it's a side hustle alongside full-time work. See our detailed guide to Depop tax in Australia for the full breakdown.
If the ATO considers your Depop selling to be a business activity, you must declare all your sales income in your tax return. This means the gross amount — the total your buyers pay — not just what hits your bank account after Depop takes its fees. You then claim your expenses as deductions to arrive at your taxable profit.
The ATO has data matching agreements with payment providers. They can see money flowing into your account from Depop Payments and PayPal. Not declaring income that they can already see is one of the fastest ways to trigger an audit.
If you're running a business, you're entitled to an ABN and should apply for one. It's free and takes minutes. An ABN is essentially the ATO's way of registering you as a business operator. Without one, any business income you receive may be subject to withholding tax at the highest rate, which significantly reduces your take-home pay.
As a Depop business, you can deduct expenses directly related to your selling activity:
Importantly, you cannot deduct personal items sold at a loss. Only items bought with the intent to resell at a profit qualify for COGS treatment.
Depop provides basic transaction data, but it doesn't give you a clean accounting record. You'll still need to reconcile Depop payouts against your bank account, track COGS per item, and produce reports that the ATO (or your accountant) can work with. Most Depop sellers end up supplementing Depop exports with their own spreadsheets or dedicated reseller accounting tools.
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