Why is customer prepaid deposits included in income of Line 101 of GST tax returns when it is a liability and considered unearned income?

In the accrual method when a customer pays a deposit on work to be done it is not considered earned income until final invoicing. It is an other liability. Why then does QuickBooks include this unearned income in Line 101 of the GST return? 

Answer

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With the caveat that I know nothing about your tax system

I would guess, that just like in the US, it depends on the account the deposit was posted to.  You are right in that a refundable deposit is a liability and as such should post to a liability account.  Have you checked to insure it does?

It is not unearned income at the same time.  That liability is moved to current income when you use it to pay down or pay in full, the customer invoice for a sale.

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