Below is taken from ANU’s website:

Special rules apply to deposits made as security for the performance of an obligation.

Refundable deposits

If the deposit is refunded on performance of the obligation, no GST is payable because the deposit is not treated as consideration for a supply.

Example 1

ANU hires a piece of equipment. We pay $110 for the hire and a separate $55 security deposit. ANU returns the equipment the next day and gets back the $55 deposit. The GST component of the hire cost was $10 but no GST applies to the deposit.

However, if a deposit is forfeited, or at a later stage incorporated into the payment for the supply it is treated as if it were part of the payment for the supply.

Example 2

ANU fails to return the equipment and forfeits the deposit. The payment for the supply of the equipment is therefore $110 + $55 = $165. The GST component is $15.

Example 3

A customer pays a deposit to ANU of $110 reserving a room at the ANU for a conference in January. No GST is payable at this stage. The customer utilises the room in May and the $110 is then offset against the $330 accommodation charge, leaving an additional $220 payable by the customer. GST of $30 (not $20) will be payable by ANU in relation to the room hire.