How to Record Customer Deposits Paid by e-Transfer

To record a customer deposit paid by Interac e-Transfer, first decide what the contract and invoice make the payment: a true deposit, an advance or partial payment, a retainer, or an overpayment. Confirm that the money reached the bank, link it to the customer and agreement, and keep any unapplied balance visible until it is applied, refunded, or forfeited.

Do not post every amount labelled deposit directly to sales. The accounting entry and GST/HST timing depend on the facts, not the e-Transfer message. A notification is payment evidence; it is not the contract, invoice, tax decision, or bank statement.

Is It a Deposit, Advance Payment, or Invoice Payment?

Use the agreement and the payment obligation to classify the amount before choosing an account.

The CRA's deposit guidance and GST/HST time-of-liability guidance distinguish deposits from consideration paid or due for a taxable supply. Have an accountant review material, unusual, or ambiguous arrangements.

What Should a Customer-Deposit Record Include?

Create one register row for each transfer and connect it to the underlying agreement. Record:

• customer name and displayed payer name, when different;
• quote, contract, order, booking, project, or invoice number;
• what the payment reserves or pays for;
• deposit, refund, cancellation, and forfeiture terms;
• amount requested and amount received;
• e-Transfer date, final status, and reference when available;
• bank-posting date and destination account;
• accounting classification and the reviewer who approved it;
• GST/HST decision, source, and decision date;
• amount applied, refunded, forfeited, or still unapplied; and
• links to any later invoice, credit note, refund, or replacement payment.

The CRA's business-record guidance says income records should show the date, amount, and source and be supported by original documents. Keep the agreement, invoice, correspondence, notification, bank evidence, and bookkeeping entry together.

How Do You Record and Reconcile the e-Transfer?

1. Read the agreement before choosing the account

Identify what the customer receives, when the amount becomes due, whether it is refundable, and when it becomes part of the purchase price. Check whether an invoice has already been issued.

If the customer is paying an amount already due, it may be an advance or partial payment rather than a deposit. If the terms are missing or vague, document what the business and customer confirm through a trusted channel before posting a permanent classification.

2. Confirm that the money settled

Capture the displayed payer, amount, date, status, and reference from the notification, then open the financial institution through its known app or website. Confirm that the money posted to the intended account.

One transfer can generate several messages. Connect them using the reference, amount, parties, timing, and status so a sent notice and Autodeposit confirmation do not become two receipts. Leave pending, cancelled, declined, expired, or returned items out of the completed balance.

3. Add the payment to a deposit register

Link the completed transfer to the customer and agreement. Many businesses use a customer-deposit or other control account chosen with their accountant to keep unapplied money separate from ordinary paid invoices.

The register total should agree with that account. Do not mark the final invoice paid or recognize unsupported revenue merely because cash arrived.

4. Give the customer a clear acknowledgement

State the business, customer, amount, date, payment method, and purpose. Say whether the payment is being acknowledged as a deposit, part payment, or another amount under the agreement.

An acknowledgement should not promise a refund, tax result, or completion date that the contract does not support. It also does not replace a sales invoice or credit note where one is required.

5. Make the GST/HST decision separately

For a true deposit toward a taxable purchase, the CRA says not to collect GST/HST when the deposit is received. Tax is collected on the deposit when it is applied to the purchase price. If the customer abandons the purchase and forfeits the deposit, the CRA treats the forfeited amount as tax-inclusive and provides the applicable calculation.

Do not apply that deposit rule to every early payment. Under the general GST/HST rule, tax on consideration for a taxable supply is payable on the earlier of the day the amount is paid or becomes due. An invoice, written agreement, partial-payment schedule, exempt supply, place-of-supply rule, or industry exception can change the analysis.

Record the source and reasoning used. TransferLog does not calculate or classify GST/HST.

6. Apply, refund, or forfeit the amount explicitly

When the agreed event occurs, record a separate application entry that links the original transfer to the invoice or sale. Preserve:

1. the original completed transfer;
2. the balance before application;
3. the invoice or sale receiving the amount;
4. GST/HST recorded at the supported time; and
5. the remaining amount due or customer credit.

Do not edit the original transfer date to look like a new payment. If money is returned, keep the incoming transfer and create a separately referenced outgoing refund. If it is forfeited, preserve the agreement, cancellation evidence, customer communication, calculation, and tax review.

7. Reconcile the balance every month

Compare the deposit register with bank deposits, customer statements, invoices, refunds, and the general ledger. Investigate:

• a bank deposit with no customer or agreement;
• a register entry with no completed bank deposit;
• one deposit applied twice;
• an invoice that did not use an available deposit;
• a stale, negative, or unexplained customer balance;
• a refund with no link to the original receipt; and
• GST/HST posted at a different event from the documented decision.

Do not clear an unexplained difference to sales simply to make the control account balance.

How Do Common Deposit Edge Cases Work?

One transfer covers several projects

Keep one transfer row, then allocate the total according to the customer's written instructions. The project allocations must add back to the original bank deposit.

Several transfers make up one deposit

Keep each transfer with its own reference and status. Link the completed parts to the same agreement and total only the money that settled.

Someone other than the customer sends the money

Preserve both names and confirm the relationship, purpose, and refund destination. Do not overwrite the displayed payer to make the records appear to match.

The customer pays an issued invoice early

That can be an advance or partial payment of consideration rather than a deposit. Use the partial e-Transfer payment workflow and review the GST/HST timing for the invoice.

The customer sends too much

Record the full amount received, separate the intended payment from the excess, and follow the customer-overpayment workflow. Obtain the customer's instruction before holding a credit or sending a refund.

How Does TransferLog Help With Customer Deposits?

TransferLog organizes details found in supported incoming and outgoing Interac e-Transfer notification emails from connected Gmail, Outlook, or iCloud inboxes. You can search and filter records, assign categories, and export CSV or PDF on the Pro plan.

Use the notification record as one side of the deposit register, then match it to the agreement, invoice, bank deposit, tax decision, application entry, and any refund. TransferLog does not interpret contracts, choose an accounting account, calculate GST/HST, create invoices, access bank accounts, or maintain a customer subledger.

For ordinary customer receipts, read when e-Transfers count as business income. For returned money, use the customer refund workflow.

Official Sources

• CRA: GST/HST in special cases—deposits
• CRA: GST/HST Time of Liability
• CRA: Accounting for your earnings
• CRA: Business records
• Interac e-Transfer Terms of Use

This article provides general record-keeping information, not tax, legal, or accounting advice.

Organize supported customer-deposit notifications with TransferLog. Start free, then reconcile the notification record with the agreement, bank deposit, invoice, and customer balance.