How to Refund Tenants Deposits Directly Held With Custodial Scheme (Xero Users)

This is for a scenario where the Custodial Scheme (DPS, TDS, My Deposits) refunds the tenant directly. In order to do this, you must initially follow the set-up instructions in this guide

Step 1 – Transferring the Deposit

Initially, the deposit needs to transfer back into the main tenant account in preparation for its return. This is created in Arthur using the Add Transaction within the tenancy, and use transaction type “Deposit Transfer to Rent Account”

deposit transfer to rent account

Step 2 – Dealing with deductions

*Ignore this step if there are no deductions to the tenant.*

If there are deductions, you must undergo two steps, one in Arthur and one in Xero

In Arthur

This is done within the tenancy in Arthur. Select Add Transaction and enter “Sundry Charge”. This will decrease the amount owing to the tenant and count as a deduction.

In Xero (this will be after you sync)

Go onto your Bank Reconciliation page. If there are any deductions, the Custodial Scheme will send you directly the funds. You must deal with these in order to level off the nominal account within Arthur. Find the received item from the Custodial Scheme and follow these steps.

 

In…

Who – Select the custodial scheme

What – The Nominal Account set up for your custodial

Why – Description

Units/Properties – Tracking codes for unit and properties

Step 3 – Remitting to the tenant

It is now time to remit to the tenant. This is done in the ‘Close tenancy’ function within the tenancy screen in Arthur. On the left click on the three dots and select Close Tenancy. At the point of closing the tenancy you will be prompted to enter a bank account from where the refund is coming from. You will choose the account set up in the following guide. The refund process is now complete. No entry will go through the bank account in Xero as the credit will be created in Xero as a credit to the custodial account.

close tenancy

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