A refundable rental deposit is generally tracked separately from rent expense while the company retains a right to recover it. Keep the lease, payment evidence and a deposit schedule so the balance can be reviewed. The word “deposit” on a transfer reference is not enough: the contract determines whether the amount is refundable, applied to rent or subject to deductions.

Accounting records, calculator and glasses on a desk
Illustrative photograph by Cht Gsml.

Read the payment terms first

Identify the tenant, landlord, premises, amount, refund conditions and any right to apply the sum against rent. Separate a security deposit from advance rent, a non-refundable fee or another payment made at the same time. Ask the accountant to confirm the classification under the company’s reporting framework, including any material financing or longer-term issues.

Build a deposit schedule

Record the contract reference, amount paid, payment date, currency, expected recovery event and ledger account. Include the person responsible for monitoring the tenancy and the latest correspondence with the landlord. Review the schedule when the lease is renewed, amended or terminated, not only when a refund is received.

Illustration: rent and security paid together

A company transfers S$9,000, comprising S$3,000 for an initial rent period and S$6,000 as refundable security. The transfer should not be treated as one S$9,000 rent expense merely because it was paid to the landlord. Keep the contractual split and have the accountant post each component to the appropriate account. The tax and GST treatment must be assessed separately.

When the landlord makes deductions

Obtain an itemised explanation and the relevant supporting documents. A landlord’s proposed deduction may be disputed, so do not assume every deduction is an accepted expense. Reconcile the original deposit, agreed deductions and cash refund. Keep any disputed amount identifiable and ask the accountant whether its recoverability needs review.

Close the balance carefully

  1. Compare the landlord’s settlement with the lease terms.
  2. Identify amounts refunded, applied or withheld.
  3. Approve the treatment of each component.
  4. Match the bank receipt to the deposit schedule.
  5. Retain the final reconciliation with the contract.

A zero balance in the ledger is not proof that the company received everything due.

Keep the accounting and tax decisions distinct

A bookkeeping classification does not by itself establish tax deductibility or an input GST entitlement. Give the accountant the actual documents. Read bookkeeping basics, the distinction between bookkeeping and accounting and recordkeeping requirements for related guidance.

Official guidance: IRAS records and supporting schedules.

Help with your company records

For accounting and bookkeeping support, contact Raffles Corporate Services at [email protected] or WhatsApp +65 8501 7133. Tell us which records or transactions need attention so we can discuss the relevant next steps.