Key takeaways
- Booking deposits, contract deposits and down payments are contract liabilities, not revenue
- The key question is what the customers' money was spent on: how many baht went into project costs and how many left the project
- Customer advances must be reconciled to the unit-level sales contract register
- S&P and leasehold carry different legal, accounting and tax risks, so they need separate accounts and separate reviews
The examples in this article are written to illustrate risk patterns and do not identify or accuse any person or entity. Warning signs are grounds for further review, not a conclusion that wrongdoing has occurred.
Customer advances are a liability
| Issue | Approach |
|---|---|
| Substance | A contract liability under TFRS 15 until ownership transfer |
| Classification | Where the obligation will be settled within the normal operating cycle, TAS 1 classifies it as a current liability even if that is more than 12 months away. This is consistent with classifying WIP as a current asset. Disclose the portion expected to transfer after more than 12 months so that readers of the financial statements can see it. |
| Common mistakes | Classifying the whole balance as non-current when the project is close to transfer makes liquidity ratios look better than they really are. |
| Date the balance is cleared | The ownership transfer day, when revenue and cost of sales are recognised |
Warning signs by contract type
| Account name | Hidden risk | Warning signs | Checkpoint |
|---|---|---|---|
| Customer advances: sale and purchase agreement (SPA) | Customer money is used for the wrong purpose, creating a refund obligation if the project is delayed | Customer advances are high, but the cash in the bank is very low | Reconcile to the unit-level sales contract register. Check the cancellation rate and the refund obligation |
| Customer advances: long-term lease (leasehold) | A lease structure is used to get around the foreign quota. Revenue recognition and tax differ from an S&P | The leasehold balance is much larger than the S&P balance, with no lease registration | Check the registration of leasehold rights at the land office, the foreign quota, and the tax on rent received in advance |
Reconciling the use of customer money
High customer advances with little cash left are not always wrong, because the money may simply have been spent on normal construction costs. But the owner must be able to explain it in numbers every month. This reconciliation framework needs no special data.
Cumulative customer receipts = project costs actually paid + selling and administrative expenses actually paid + refunds to customers who cancelled + cash taken out of the project + debt repayments + closing cash balance − other funding sources used to pay for these items
Other funding sources, such as loans and equity, must be shown separately. If the "cash taken out of the project" line has a balance, there must be a written agreement, interest and a repayment date.
Figures to review together
- The unit-level sales contract register compared with the customer advances balance in the accounts
- Cancellation rate and the money that must be refunded
- Take-up rate and the units that can be transferred in the next 6–12 months
- Closing cash balance compared with customer advances
- Cost to complete compared with the money still to be collected from customers and other funding sources
Outright sale vs long-term lease
Legal position as at April 2026: the cap on foreign ownership of condominium units is still 49% of the total unit area of the building. The proposal to raise it to 75% is not yet in force. Check the latest position before relying on it.
| Issue | Outright sale (S&P / freehold) | Long-term lease (leasehold) |
|---|---|---|
| Substance of the contract | Transfer of ownership of the condominium unit | Grants a right to lease, generally for 30 years, registered at the land office |
| Why it is used | Thai buyers, or foreign buyers within the 49% quota | Used when the foreign quota is full, or when the property is not a condominium unit under the condominium law |
| Revenue recognition in the accounts | Recognised at the point control transfers (TFRS 15, point in time) | Rent received in advance is recognised gradually over the term of the contract. Also assess the conditions under TFRS 16. |
| Corporate income tax | Revenue is recognised in the accounting period of transfer | Practice may allow revenue to be recognised gradually over the lease term if the conditions are met. Obtain written advice before relying on this. |
| Taxes and fees on the registration date | Transfer fee, SBT and WHT: see Warning signs in revenue, costs and tax for details | Lease registration fee of 1% of the rent over the whole lease term, and stamp duty of 0.1% |
| Legal risks | Foreign quota, and evidence of foreign currency brought into Thailand | The 30+30+30-year structure is enforceable with certainty only for the first 30 years, and risks being interpreted as holding on behalf of a foreigner |
Red flag
If customer advances on the leasehold side are significantly larger than on the S&P side, the project relies mainly on a lease structure, which carries higher legal risk and greater tax uncertainty. It must be supported by written legal and tax opinions, not just a contract form that has been reused from project to project.
Liability when customer money is misused
The duty to safeguard money received in advance from condominium buyers rests with the developer company and its directors. Customer money used for the wrong purpose, to the point that units cannot be transferred, can lead to both civil claims and fraud allegations. The rule to follow: customer money may leave the project only where there is a written agreement, interest and a repayment date.
Project owner's corner: what to look for and what to ask
- Every month, ask to see customer advances reconciled to the sales contract register, with no exceptions.
- Ask: what was customers' money spent on this month, how many baht became project costs, and how many left the project?
- Ask: how many contracts were cancelled this month, and how much must be refunded?
- Ask: how many units can be transferred in the next 6 months, and what are they worth?
Internal auditor's corner: checkpoints
- Every quarter, reconcile customer advances to the unit-level sales contract register and test the contract cancellation rate.
- Check the registration of leasehold rights and the foreign quota
- Check that the refund obligation and the contract terms that apply if the project is delayed have been assessed and disclosed
This content is management and internal audit guidance, not a legal or tax opinion for a specific case. Check the current law and consult an auditor, tax adviser or lawyer before making decisions in a real case.