Can an Ontario Rent Deposit Be Paid by e-Transfer?

Yes. An Ontario last month’s rent deposit can be paid by Interac e-Transfer if the landlord accepts that payment method. The transfer method does not change the legal limits: the deposit can be collected on or before the tenancy agreement is made, cannot exceed the lesser of one rent period and one month’s rent, and must be applied to the final rent period—not damage.

Confirm the completed deposit in the landlord’s bank account and keep it in a dedicated deposit ledger. Link the tenant, unit, payer, amount, Interac reference, receipt, annual interest, lawful changes, and final application instead of treating it as ordinary monthly rent.

What Ontario Rules Apply to Last Month’s Rent?

Ontario’s Residential Tenancies Act calls this a rent deposit. People commonly call it last month’s rent. It is different from a damage deposit, pet deposit, key deposit, or ordinary rent payment.

Sections 105–109 of the Act establish the main controls:

• The only general security deposit a landlord may collect is a rent deposit allowed by section 106.
• The landlord must require it on or before entering into the tenancy agreement.
• It cannot exceed the lesser of one rent period and one month’s rent.
• It must be used for the last rent period before the tenancy ends.
• The landlord owes interest annually at the guideline rate in effect when the payment becomes due.
• The landlord must provide a free receipt when the tenant asks. A former tenant can ask within 12 months after the tenancy ends.

The Act also requires repayment when a prospective tenant does not receive vacant possession, subject to the specific different-unit exception in section 107. A record-keeping workflow cannot decide a legal dispute, so check the current law or get Ontario tenancy advice when the facts are contested.

Does Paying by e-Transfer Change the Deposit Rules?

No. The e-Transfer is the payment channel, not a different type of deposit. The lease and deposit record should identify the amount as a rent deposit for the named tenancy even if the banking message says only rent.

The Landlord and Tenant Board’s guide says a landlord and tenant usually discuss how rent will be paid and cannot change an agreed payment method unless both agree. It also says a landlord cannot require post-dated cheques or automatic payments. A tenant-initiated e-Transfer is not the same as giving the landlord authority to debit the tenant’s account, but the parties should still document the payment method they actually agreed to use.

Do not send a deposit to an unverified address. Confirm the landlord or property manager, unit, amount, destination, and due date through the lease or another trusted channel before initiating the transfer.

How Much Interest Applies in 2026 and 2027?

The Act ties annual rent-deposit interest to Ontario’s rent increase guideline that is in effect when the interest payment is due. Ontario’s current guideline page lists 2.1% for 2026 and 1.9% for 2027.

Do not assume every tenancy uses the same anniversary or that every rent increase equals the guideline. Record the date interest becomes due, the applicable rate, the actual deposit balance, and how the amount was paid or credited. Section 106 also permits specific deposit top-ups and deductions of interest against an eligible increase in the deposit; document each side rather than silently netting the ledger.

What Should the Rent-Deposit Ledger Include?

Keep one deposit record per tenancy with:

• Property, unit, tenant, and co-tenant names
• Name displayed on the e-Transfer when different from the tenant
• Tenancy start date and rent period
• Lawful rent and maximum deposit when collected
• Date requested, notification date, bank-deposit date, and amount
• Interac reference or confirmation number when available
• Receiving account or property account label
• Receipt date and number when one is requested
• Each interest period, rate, calculation, payment, credit, or offset
• Each lawful top-up, refund, or correction and its reason
• Final rent period, application date, and remaining balance
• Links to the lease, notices, correspondence, and bank evidence

Use a label such as last month’s rent deposit—Unit 204. A generic rent category can cause the amount to be counted as the first month’s rent, lost among regular payments, or applied to the wrong unit.

How Do You Record an Ontario Rent Deposit by e-Transfer?

1. Verify the tenancy, amount, and destination

Match the proposed payment to the lease, landlord or authorized manager, unit, tenant, rent period, lawful rent, and agreed payment method. Confirm the email address or mobile number through a trusted channel before sending money.

Do not reuse instructions from another property or rely only on a forwarded message. If instructions changed, verify the change independently.

2. Preserve the transfer details

Record the payer, recipient, amount, sent date, displayed status, message, and Interac reference. If a parent, roommate, employer, or another person pays for the tenant, keep both the payer and tenant names plus the explanation.

Open the financial institution through its known app or website and confirm that the deposit completed in the intended account. Interac explains that email or text carries a notification while financial institutions move the money.

3. Post it to the deposit ledger

Once the bank confirms the deposit, create the deposit entry. Do not post it as ordinary rent for the first month or as income twice. Keep the operational purpose visible even when an accountant uses a separate financial-statement treatment.

If several e-Transfers make up one deposit, retain each reference and link them to one total deposit balance. If one transfer combines first month’s rent and the rent deposit, allocate the two purposes explicitly and make sure the parts add to the bank deposit.

4. Give a receipt when requested

Ontario requires a free receipt on request. A useful receipt identifies the tenant and landlord, rental unit, amount, date received, purpose, payment method, and a receipt number or other internal reference.

The Interac notification is not automatically the landlord’s receipt because it may not identify the unit, purpose, or landlord’s acknowledgement. The Ontario rent-receipt guide explains the receipt workflow in detail.

5. Record interest and lawful changes

Do not archive the record until move-out. Add each annual interest event and any lawful deposit increase, credit, payment, or refund as a dated row. Preserve the original amount and calculation history instead of replacing them with the latest balance.

6. Reconcile the deposit register

Compare the deposit ledger with bank activity, the rent roll, and tenancy records. Investigate a notification without a bank deposit, a bank deposit without a tenant match, a duplicate notification, a wrong-unit allocation, missing interest, or an unexplained balance change.

For multiple properties or units, use the e-Transfer rent tracking workflow to separate monthly charges from deposits and payment events.

7. Apply it to the final rent period

Confirm the tenancy’s lawful final rent period and current deposit balance. Record the application in both the deposit ledger and rent roll. Keep the original receipt, interest history, final application, and any remaining amount rather than deleting the deposit row.

How Should Common Deposit Problems Be Handled?

• The transfer is pending, cancelled, declined, or expired: preserve the status and confirm what happened before requesting a replacement. Use the e-Transfer status workflow.
• The deposit exceeds the lawful maximum: isolate the excess and get Ontario tenancy advice; do not relabel it as another fee.
• The tenant never receives vacant possession: section 107 may require repayment. Preserve the transfer, repayment, and any different-unit agreement.
• The payment came from someone else: record the displayed payer and the tenancy it was intended to fund.
• The wrong recipient received the transfer: contact the financial institution immediately and keep the deposit unconfirmed. Do not create a received-deposit entry without bank evidence.
• The property changes owners: carry the deposit ledger, interest history, and tenancy documents into the handoff. A new landlord generally cannot collect a second deposit when one was already paid.
• The amount is disputed: keep the source records and chronology unchanged and seek appropriate advice instead of forcing the ledger to balance.

How Does TransferLog Help With Ontario Deposit Records?

TransferLog organizes details found in supported Interac e-Transfer notification emails from connected Gmail, Outlook, and iCloud inboxes. Landlords and property managers can search and filter transactions, assign categories, and export CSV or PDF on the Pro plan before matching the records to the deposit ledger and bank account.

TransferLog does not create a rent receipt, calculate deposit interest, determine lawful rent, access a bank account, transfer a deposit to a new landlord, or decide how the Residential Tenancies Act applies. Use it for the notification side of the record, then preserve the lease, bank evidence, interest calculations, and receipts separately.

Official Sources

• Ontario Residential Tenancies Act, sections 105–109
• Landlord and Tenant Board: Guide to the Residential Tenancies Act
• Ontario: Current and previous rent increase guidelines
• Ontario: Guide to the standard lease
• Interac e-Transfer help
• CRA Guide T4036: Rental income

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

Organize supported rent-deposit notifications with TransferLog. Start free, then reconcile the export with the tenancy, interest, receipt, and bank records.