A deposit invoice is a normal invoice for part of the price, issued after the client accepts your quote and before you start. It names the quote it relates to, shows the deposit as a percentage and a dollar amount, and, if you're registered for GST, shows the GST on the deposit. The final invoice then lists the full job, subtracts the deposit already paid and asks for the balance. Any sole trader invoice generator can do this if you set the lines up the way this guide shows.
Building or renovating homes? Deposits on residential building work are capped by state law. The caps are summarised below; progress claims and Security of Payment are in our guide to invoicing for building work.
What is a deposit invoice?
A deposit invoice asks for an agreed slice of the job price up front, usually to cover materials or lock in a booking. It's a real invoice with its own number, not a quote or a note in an email. For a GST-registered business it's normally a tax invoice, because GST on a part payment is generally reported when it's invoiced or paid.
The sequence for most jobs has three documents:
- Quote. Full scope, full price, and the deposit terms in writing ("30% deposit on acceptance, balance on delivery"). The quote generator has a notes field for exactly this.
- Deposit invoice. Issued when the client says yes. It references the quote number.
- Final invoice. The whole job, less the deposit received, with the balance due.
Bigger jobs add progress invoices between steps 2 and 3. The method is the same: each invoice shows what's been billed before and what's left. If you haven't written the quote yet, start with how to write a quote, because the deposit terms belong there first.
How do I write a deposit invoice? A worked example
Put the deposit on its own line, name the quote, and state the percentage. Then add GST if you're registered and give a due date before work starts. Here's the full trail for one job.
Mia is a GST-registered furniture maker in Geelong. A client accepts her quote Q-0042 for a custom dining table with two bench seats, with a 30% deposit to buy the timber.
Step 1: the quote
| Quote Q-0042 line | Qty | Price | Amount |
|---|---|---|---|
| Blackwood dining table, 2.4 m | 1 | $3,600.00 | $3,600.00 |
| Matching bench seat | 2 | $450.00 | $900.00 |
| Delivery and set-up | 1 | $150.00 | $150.00 |
| Subtotal | $4,650.00 | ||
| GST (10%) | $465.00 | ||
| Total | $5,115.00 | ||
Terms on the quote: "30% deposit on acceptance; balance due on delivery."
Step 2: the deposit invoice
| Tax Invoice INV-0107 | Amount |
|---|---|
| 30% deposit on quote Q-0042 (dining table and two bench seats), 30% of $4,650.00 | $1,395.00 |
| GST (10%) | $139.50 |
| Deposit due within 7 days | $1,534.50 |
Check: 30% of the GST-inclusive quote total is $5,115.00 × 30% = $1,534.50, the same figure. Either way of working it gives the same answer, so pick whichever your template handles.
Step 3: the final invoice
The final invoice repeats every line from the quote, then subtracts the deposit. The cleanest layout subtracts the deposit before GST, so the GST on this invoice is only the GST not already invoiced.
| Tax Invoice INV-0115 | Amount |
|---|---|
| Blackwood dining table, 2.4 m (1 × $3,600.00) | $3,600.00 |
| Matching bench seat (2 × $450.00) | $900.00 |
| Delivery and set-up | $150.00 |
| Job total before GST | $4,650.00 |
| Less deposit invoiced on INV-0107 (excl. GST), paid 4 November 2026 | −$1,395.00 |
| Subtotal this invoice | $3,255.00 |
| GST (10%) | $325.50 |
| Balance due on delivery | $3,580.50 |
The totals reconcile: $1,534.50 + $3,580.50 = $5,115.00, the quoted price. GST across both invoices is $139.50 + $325.50 = $465.00, which is 10% of $4,650.00. Nothing is charged or reported twice.
A common alternative shows GST on the full $4,650.00 ($465.00, total $5,115.00) and then subtracts the $1,534.50 paid. The client still pays $3,580.50, but a business client's bookkeeper may claim $465.00 of GST credits on top of the $139.50 from the deposit invoice. If you use that layout, label it clearly ("GST of $139.50 already invoiced on INV-0107"), or check with your tax agent which layout suits your software.
Do I charge GST on a deposit?
If you're registered for GST and the job is taxable, usually yes: a deposit that's part payment of the price carries GST, and you report it like any other part payment. A true security deposit, held only to make sure the client goes through with the deal, is treated differently.
The ATO ruling GSTR 2006/2 says a security deposit is not treated as payment for a supply, and so isn't subject to GST, until it's forfeited or applied towards the price. The same ruling gives an example of a payment that isn't meant as an earnest and is simply "a part payment of the agreed purchase price". Most trade and freelance deposits for materials or a booking look like part payments.
| Type of payment | Example | When GST is reported |
|---|---|---|
| Part payment of the price | Mia's 30% timber deposit | Cash basis: the period you receive it. Non-cash basis: the period you invoice or receive it, whichever happens first |
| Security deposit (bond) | A $200 bond on hired equipment, refunded when it comes back | Not until it's forfeited or applied to the price |
The timing rules are from the ATO's page on choosing an accounting method: on a cash basis, if you receive part payment you only account for the GST in the part you received. Mia reports cash. Her $1,534.50 deposit arrives in the October–December quarter, so $139.50 goes on that BAS; if the $3,580.50 balance lands in January, its $325.50 goes on the next one.
If a $200 equipment bond is kept because the gear comes back damaged, it's forfeited, and for a taxable supply the GST inside it is $200 ÷ 11 = $18.18. Whether a particular deposit is a part payment or a security deposit can turn on your contract wording, so ask a registered tax agent when it's not obvious. The basics of adding GST are in do I add GST to my invoice?
How much deposit can I ask for?
Outside residential building work, there's no single legal cap on deposits in Australia. The amount is whatever you and the client agree in the quote or contract, so set it to cover your real up-front costs. For residential building work, state law caps it.
| State (residential building) | Maximum deposit | Example |
|---|---|---|
| NSW | 10% (applies to small jobs of $5,000–$20,000 and larger jobs) | $15,000 bathroom: up to $1,500 |
| Victoria | 10% under $20,000; 5% at $20,000 or more | $38,000 kitchen: up to $1,900 |
| Queensland | 20% at $3,300 or less; 10% from $3,301 to $19,999; 5% over $20,000 | $3,000 job: up to $600 |
Sources: the NSW Government guide to home building contracts, Consumer Affairs Victoria and the QBCC. Queensland allows up to 20% where substantial custom work or prefabrication done off site is more than 50% of the contract price. Victoria has passed amending laws that let deposit limits be set by regulation, so check Consumer Affairs Victoria before you sign new contracts. Other states and territories set their own rules; check your regulator.
For everyone else, a workable rule: ask for enough to cover materials or booked time you can't get back if the client walks away, and no more. Mia's 30% ($1,534.50) roughly covers her timber. A photographer might take a flat booking fee; a web designer might bill 50% up front on a fixed-price build.
Can a deposit be non-refundable?
Only partly. Your contract can say what happens to a deposit if the client cancels for no good reason, but no wording can take away the client's legal right to a remedy if your goods or services turn out faulty. "Non-refundable" on its own can mislead.
The ACCC says businesses can't take away a consumer's right to a refund or replacement for faulty products or services, and it's illegal to rely on policies that say "no refunds". The same page says consumer guarantees don't cover a client who simply changed their mind. If a service has a major problem, the consumer can cancel and get a refund, though they may need to pay a reasonable amount for work already done properly.
In practice, write the cancellation terms into the quote in plain words and tie them to real costs. For example: "If you cancel after the timber has been ordered, the deposit covers materials already bought. This doesn't affect your rights under the Australian Consumer Law." Get legal advice before relying on a deposit term for a large amount.
The friction in deposits is retyping: the quote becomes a deposit invoice, then the same lines go onto a progress invoice and the final one. In InvoiceSonic (from the same team), Pro (A$19/month) lets the client accept your quote online, then turns it into deposit, progress and final invoices with the line items carried over, so the numbers on the last invoice match the quote.
Deposit invoice wording you can copy
Name the quote, the percentage and the dollar amount on every deposit line, and show the deposit as a deduction on the final invoice. Use these as a starting point:
- Deposit line: "30% deposit on quote Q-0042, dining table and two bench seats."
- Fixed deposit: "Booking deposit for wedding photography, Saturday 14 March 2027. Deducted from the final invoice."
- Due date: "Deposit due within 7 days. Work is scheduled once the deposit is received."
- Progress line: "Progress payment 2 of 3: stage 2 complete, per quote Q-0058."
- Final invoice deduction: "Less deposit received, INV-0107, paid 4 November 2026."
- Balance line: "Balance due on delivery: $3,580.50."
Payment term wording, from 7-day terms to "due on delivery", is covered in invoice payment terms. If you're GST-registered, a tax invoice template already has the heading, ABN and GST lines the deposit invoice needs.
How do I show a deposit on the final invoice?
List the full job, subtract the deposit as its own negative line that names the deposit invoice number and the date it was paid, then show the balance due. Subtract the GST-exclusive deposit before GST if your deposit invoice already showed its GST.
That's the layout in Step 3 above. Two details matter. First, reference the deposit invoice by number so anyone checking the books can match them; how to number invoices covers a numbering scheme that keeps them in order. Second, if the deposit was never paid, don't deduct it. Bill the full amount and cancel or credit the unpaid deposit invoice instead.
For a sole trader doing this a few times a month, the free invoice generator for sole traders and tradies handles it: add the job lines, add a negative line for the deposit, and the GST and balance update as you type.
Common deposit invoice mistakes
- No invoice at all. Asking for the deposit by text means no invoice number, no GST record and nothing to deduct later.
- Charging GST twice. Showing $465.00 GST on the final invoice and $139.50 on the deposit invoice, with no note, overstates GST by $139.50.
- Deducting the wrong figure. Subtracting $1,534.50 before GST, instead of $1,395.00, leaves the final invoice $153.45 short. ($1,534.50 − $1,395.00 = $139.50, plus 10% GST on it = $153.45.)
- Going over a building cap. A 10% deposit on a $38,000 Victorian kitchen ($3,800) is double the 5% cap of $1,900.
- Deposit terms only on the invoice. If the percentage and cancellation terms weren't in the quote the client accepted, they're harder to rely on.
The short version
Quote with the deposit terms, invoice the deposit with its own number and GST, then bill the full job less the deposit on the final invoice. Check the totals add back to the quote. If you build homes, check your state's cap first.
If you're quoting and invoicing deposits every week, InvoiceSonic keeps the quote, deposit and final invoice linked to the client. Pro (A$19/month, 7-day trial) converts accepted quotes into invoices with the lines carried over and sends automatic reminders when a balance runs late.
This article is general information, not tax or legal advice. For GST on a specific deposit, see GSTR 2006/2 or ask a registered tax agent. Building deposit limits change; check your state regulator before you sign.
Frequently asked questions
What is a deposit invoice?
A deposit invoice is an invoice for an agreed part of the price, issued after the client accepts your quote and before work starts. It has its own invoice number, references the quote, and shows the deposit as a percentage and dollar amount, plus GST if you're registered.
Do I charge GST on a deposit?
If you're registered for GST and the job is taxable, a deposit that's part payment of the price generally includes GST. The ATO's ruling GSTR 2006/2 says a true security deposit isn't subject to GST until it's forfeited or applied to the price. Ask a tax agent if you're unsure which yours is.
How much deposit can I ask for in Australia?
Outside residential building work there's no single legal cap; it's what you agree in the quote. For residential building, NSW caps deposits at 10%, Victoria at 10% under $20,000 and 5% at $20,000 or more, and Queensland at 20%, 10% or 5% depending on the contract price.
How do I show the deposit on the final invoice?
List the full job, then add a negative line such as 'Less deposit received, INV-0107, paid 4 November 2026', then show the balance due. If the deposit invoice already showed GST, subtract the GST-exclusive deposit before GST so GST isn't charged twice.
Can I make a deposit non-refundable?
Your quote can set out what happens to a deposit if the client cancels for no good reason, such as a change of mind. It can't take away the client's rights under the Australian Consumer Law if your goods or services are faulty. The ACCC says 'no refunds' policies that deny those rights are illegal.
Should a deposit invoice be a tax invoice?
If you're registered for GST and the deposit is part payment for a taxable sale, issue it as a tax invoice with your ABN and the GST on the deposit. If you're not registered, issue a plain invoice with no GST.
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