Deposits and downpayment

Key requirements

A deposit that forms part of the price is a partial payment: GST is accounted for when received even if refundable upon cancellation. If refunded, a documented adjustment, such as a credit note, can reverse the tax previously reported. A genuinely refundable security deposit is not taxed merely on collection. GST arises when it is applied to an amount payable, such as unpaid taxable rent. A rental security deposit retained for early termination under the tenancy terms is treated differently in the source example and does not require output tax on that forfeiture. Separate amounts used to settle rent from compensation retained on termination. The word “refundable” does not alone resolve treatment; assess whether the money is part-payment for the supply or security for performance.