How to Record a Customer Refund Sent by Interac e-Transfer
A Canadian bookkeeping workflow for linking an e-Transfer refund to the original sale, documenting GST/HST adjustments, and reconciling the bank account.
To record a customer refund sent by Interac e-Transfer, leave the original sale and payment in your records, create a separate refund linked to that sale, and record the new transfer with its own date, amount, recipient, status, and reference number. If GST/HST is being refunded or adjusted, issue the required credit or debit note and record the tax separately. Finally, match the completed refund to the withdrawal in the bank account.
Do not erase the original payment or change it to a failed transfer. A refund after a completed sale is a new business event. Keeping both sides of the trail explains what the customer paid, why money was returned, and how the final revenue and tax amounts were calculated.
Is a Refund the Same as a Cancelled e-Transfer?
No. First determine whether money was actually deposited.
- Pending, declined, cancelled, or expired attempt: the original transfer did not produce a completed payment in your records. Update its status and keep the invoice or balance open.
- Refund: the original payment completed, then the business returned some or all of the money in a new transaction.
- Reversal or disputed transaction: the bank changed or investigated the movement. Contact the financial institution and record what actually appears in the account rather than labelling it a voluntary refund.
Interac's terms say a sender can cancel before the recipient attempts to deposit a transfer or before Autodeposit occurs, while a deposited transfer is final in Interac's records. A voluntary refund after deposit should therefore have its own payment record. For an attempt that never completed, use the pending, cancelled, and expired e-Transfer workflow instead.
What Should an e-Transfer Refund Record Include?
Create one refund row and link it to the original invoice, receipt, order, or customer account. Include:
- Original sale or invoice number
- Original payment date, amount, method, and reference
- Customer name and the name shown on the original transfer
- Reason for the refund or price adjustment
- Amount of the sale being refunded
- GST/HST refunded or adjusted, when applicable
- Credit-note or refund-document number
- Refund approval date and approver, if the business has an approval process
- Email address or mobile number independently confirmed for the recipient
- New e-Transfer date, amount, status, and reference number
- Bank withdrawal date
- Any retained restocking fee, non-refundable amount, or customer credit
The refund amount should not replace the original sale amount. Recording both events makes partial refunds, tax adjustments, and month-end reconciliation visible.
How Do You Record an e-Transfer Refund From Start to Finish?
1. Confirm the original payment was completed
Open the business's known banking app or website and match the original payment to a completed deposit. Check the amount, payer, date, and reference against the invoice or order.
If the original transfer never settled, do not create a refund simply because a customer received a “sent” notice. Correct the status of the original attempt and resolve the unpaid or replacement payment instead.
2. Confirm what is being refunded
Document whether the refund covers the full sale, one returned item, a cancelled service, an overpayment, a deposit, or a price adjustment. Link the reason to the business's return policy, agreement, or correspondence.
For a partial refund, state which item or portion changed. If the business keeps a restocking fee or another amount, show the retained amount separately rather than sending a net figure with no explanation.
3. Validate the recipient before sending money
Do not send a refund to a new email address or mobile number based only on an unexpected message. Confirm the customer and instructions through a trusted contact method and compare them with the original sale record.
Interac recommends verifying payment requests and reconciling accounts regularly. If the original payment or refund request appears fraudulent, stop the routine workflow and contact the financial institution. A bookkeeping record cannot confirm identity or recover funds.
4. Create the refund or credit document
Create the document your bookkeeping system uses for a refund, return, or credit. Reference the original invoice and show the amount being reduced. This document explains the business reason; the e-Transfer notification only documents the payment method and transaction details.
The Canada Revenue Agency requires businesses to keep records supporting income and expenses. Preserve the original invoice, refund approval, customer correspondence, credit note when required, transfer confirmation, and bank record as one connected trail.
5. Handle GST/HST separately when it changes
If the business is registered for GST/HST and refunds or credits tax that it previously charged, the CRA's returned-goods guidance says the supplier should issue a credit note, or the customer can issue a debit note, containing prescribed information. The tax adjustment and the reduction in the sale should be identifiable.
Do not assume every refund changes GST/HST. The treatment depends on the original supply, what was refunded, whether tax was originally charged, and the business's accounting method. If the facts are unclear, keep the complete documents and ask a qualified accountant. The e-Transfer amount alone does not determine the tax entry.
6. Send and record the refund as a new transfer
Send the approved amount through the financial institution. Record the refund as its own outgoing transaction with the new date, recipient, amount, status, and Interac reference when available.
Do not reuse the original payment reference or edit the customer payment into a negative value without a linked refund record. One reference identifies the incoming payment; the other identifies the outgoing refund.
7. Reconcile the refund with the bank account
Confirm that the outgoing transfer completed and match it to the bank withdrawal. Then review the connected records together:
- Original invoice or sale
- Original customer payment
- Refund or credit document
- Outgoing e-Transfer refund
- GST/HST adjustment, if applicable
- Final customer balance and bank activity
The customer's balance should show the economic result without deleting either cash movement. At period end, investigate refunds that are still pending, have the wrong recipient, lack an approval, or do not agree with the bank.
How Should You Handle Common Refund Edge Cases?
A customer overpaid
Keep the full incoming payment, apply the amount actually owed, and record the excess as a refund or customer credit based on what the business does. Do not reduce the incoming transfer to the invoice amount because the bank received more.
A supplier refunded your business
Link the incoming refund to the original supplier expense and any supplier credit note. Do not record it as a new customer sale. Review whether a previously claimed GST/HST input tax credit must be adjusted with your bookkeeper.
The refund is sent in several transfers
Keep a row for every outgoing transfer and link all of them to the same refund authorization. The sum of completed refund rows should equal the approved amount.
The customer wants the refund sent to someone else
Treat this as an exception. Confirm the request and authority independently, preserve the approval, and consider using the original payment route or another controlled refund method. Contact the bank about suspected fraud.
How TransferLog Helps Organize e-Transfer Refund Records
TransferLog organizes supported incoming and outgoing Interac e-Transfer notification records from connected Gmail, Outlook, and iCloud inboxes. You can review transaction details, filter or categorize refund records, and export CSV or PDF on the Pro plan.
A practical workflow is to categorize the outgoing notification as a customer refund, export the period, then match it to the original customer payment, credit document, and bank withdrawal. TransferLog does not issue credit notes, approve refunds, access the bank account, calculate GST/HST, or decide the accounting treatment.
For the original customer-payment side, read how to record e-Transfers as business income. For supplier payments and credits, use the business expense e-Transfer workflow.
Official Sources
- CRA: Returned goods and GST/HST credit-note requirements
- CRA GST/HST Memorandum 12-2: Refunds, adjustments, and credits
- CRA: Business records for income and expenses
- Interac e-Transfer Terms of Use
- Interac guidance for protecting business payments
This article provides general record-keeping information, not tax, accounting, legal, or fraud-recovery advice.
Organize supported e-Transfer refund notifications with TransferLog. Start free, then reconcile the records with your credit documents and bank account.