Do I charge GST/HST when I receive a customer deposit?

Arsen Accounting Services · Question 143 · Sources checked October 29, 2026

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A true deposit held as security for a future obligation generally has different GST/HST timing from a payment toward an invoiced sale. The substance of the arrangement matters more than the word “deposit” on your receipt.

Identify when the amount becomes payment

CRA explains that GST/HST is generally collected when a deposit is applied to the purchase price. If the customer forfeits the deposit because the agreement is not completed, the forfeited amount can be treated as tax-inclusive consideration.

An advance payment that is already consideration for a supply should not automatically be treated as a security deposit. Review the contract, invoicing terms, and what happens if the customer cancels.

Official guidance: [1], [2].

Keep deposits separate in the books

For example, a contractor receives money to reserve a future job. Record whether it remains a security deposit, is applied to an invoice, or is forfeited. Those events need dates so the correct GST/HST reporting period can be identified.

Maintain a deposit register

• Customer, contract, and amount received.
• Purpose of the deposit and refund conditions.
• Date applied to an invoice or returned.
• Cancellation correspondence and any forfeiture calculation.

Ask your bookkeeper to reconcile the register with the deposit liability account regularly. Do not leave old deposits unresolved simply because the cash is still in the bank. Income-tax recognition may require a separate review, so a GST/HST timing conclusion should not be treated as the answer to every accounting question about the amount.