Take a deposit before you start the job

A plumber does not start a $9,000 bathroom without money up front. When that money arrives it is in your bank, but you have not earned it: until the work is done you owe it back. TALISK_HQ records it as a customer deposit, which keeps it out of your income and off your sales tax return until you invoice the work.

Record the deposit when it arrives

1. On Ledger › Banking › Transactions, find the deposit that arrived and open its details with the chevron at the start of the row.
2. Under Change what this is, click Customer deposit.
3. Pick the customer it came from and click OK.

The line is now recorded, and the customer carries that deposit. You can see what everyone is holding on Invoicing › Clients, in the Deposit held column. To reverse the whole thing, open the line's details again and click Undo customer deposit.

Use it when you invoice the work

1. Open the invoice on Invoicing › Invoices.
2. Click Apply deposit, which shows what that customer has on deposit.
3. Enter how much to use and click Apply deposit.

TALISK_HQ offers you the smaller of the deposit held and the balance due, so you cannot apply more than either. A part of a deposit can go on one invoice and the rest on the next, which is what happens on a job billed in stages.

Give it back if the job does not happen

Find the withdrawal where you sent the money back, open its details, and click Deposit refund under Change what this is, then pick the same customer. The picker only lists customers who are actually holding a deposit, and TALISK_HQ refuses a refund larger than what they have. Their deposit goes back to zero and the two bank lines cancel out.

Why no sales tax is charged up front

A deposit is not payment for a sale until you apply it to one. The Excise Tax Act says so directly, and the CRA treats it the same way, so the GST or HST is charged on the invoice rather than on the money arriving. That is also how QuickBooks Online handles a retainer, so your accountant will recognise it.

The tax then lands once, on the invoice, at the moment you bill the work. Applying the deposit moves no tax at all: it simply pays that invoice down.

One thing worth checking with your accountant: if the money is really a prepayment for a specific job that is already agreed and settled, rather than a deposit against work that might still change, the CRA can treat it as payment straight away. TALISK_HQ cannot tell those apart from what it can see, so if a large sum arrives for a job that is already fully specified, ask.

Why this is not a customer credit

They sound alike and they are different events. A customer deposit is money you hold before a sale happens. A customer credit is money you owe back after one went wrong, such as a duplicate payment or a cancelled invoice they had already paid. They sit in different accounts, they carry different tax treatment, and your accountant reads them as separate lines, so TALISK_HQ keeps them apart. If a customer paid twice, use Customer credit instead.

If a customer walks away and you keep the deposit

The terms of some jobs let you keep a deposit when the customer cancels. That is the one deposit event that does charge tax, because the CRA treats a forfeited deposit as payment at the moment you keep it, and it also needs someone to decide which income account it belongs to. TALISK_HQ deliberately has no button for it. Ask your accountant, and record it as a manual journal entry.