Configure the Deposits

In this FAQ, we cover the following topics:

1. Deposits are Taxed Depending on Their Nature

2. Deposits on an Estimate

3. When Taxes Apply

4. Information from Revenu Québec

5. Taxable Deposits in GEM-CAR

1. Deposits are Taxed Depending on Their Nature

A deposit may be taxable or non-taxable depending on whether it is considered a payment for a supply (goods or services) or simply a deposit/potential refund.

2. Deposits on an Estimate

A deposit paid on an estimate is generally not taxable at the time of payment if:

• the final invoice has not yet been issued
• the price may still change
• the service or sale has not yet been rendered

In this case:

• the deposit is considered a payment received in advance
• it is recorded in a liability account (unearned revenue) since it does not yet constitute earned revenue.

3. When Taxes Apply

Taxes (GST/QST) become applicable when the sale is completed or invoiced, according to tax rules (often at the earlier of these two points: payment or invoicing, but with nuances depending on the type of transaction).

Therefore:

• Upon final invoicing → the total amount becomes taxable
• The deposit is then applied against the invoice
• Taxes are calculated on the total transaction amount

Important exception: If the deposit actually constitutes a firm partial payment for a specific sale, it may be considered taxable upon receipt.

4. Information from Revenu Québec

For more information on deposits in Quebec, click here to access the following page:

For more information on when GST and QST must be collected, you can consult the page here.

The GST and QST must be collected on the earlier of the following dates:

• the date an amount of money is paid for a property or service (cash sale);
• the date an amount of money is due for a property or service (credit sale).

5. Taxable Deposits in GEM-CAR

The client made a deposit of $500 on an estimate of $1,649.89. The system generated an invoice for the deposit including taxes. The deposit details are as follows:

• Pre-tax amount: $434.88
• GST: $21.74
• QST: $43.38

When the work is completed and the invoice is fully closed, the system displays the pre-tax amount as well as the total invoice amount. However, the total displayed corresponds to the balance remaining to be paid, which is the difference between the total invoice amount and the deposit already paid.

Clients would prefer that the invoice display the total sales amount, which is $1,649.89, instead of the balance of $1,149.89.

They also want the $500 deposit to be shown at the bottom of the invoice, after the total amount including all taxes (TTC), in order to clearly show the deduction for the payment already made and indicate the final balance due.

In the Point of Sale, after selecting the customer, product, or services, create a quote to view the sales details.

In the Documents tab, verify that the total amount of the sale, in this example, is $1,649.89.

To add a deposit, right-click on one of the products or services and select the Add Deposit option. You will have the options with or without taxes.

Process the payment by following the steps indicated in your GEM-CAR. An invoice will be issued for the payment. Then return to the original sale.

Then return to the original sale and proceed with the payment.

The invoice will show the deposit amount and the total amount, along with the following note: “A deposit has been applied to this invoice.”