Select Prepare to Refund on the Bonds tab of the Tenancy:

Enter the amount to be refunded to the tenant and the owner, if the tenant will receive their refund via the Bond Authority add a tick to say so.

An income invoice will be raised for the amount which will be received in trust.  Save and Approve it to proceed with processing the refund.

Once funds are reconciled to the Bond Refund Income Invoice, the owners portion will be transferred to their ledger.  If the Tenant's portion was received in trust, update the Tenancy Invoice Contact with payment details, and then process a disbursement using a profile that includes bonds.  The refunds will show on the same page as bonds to be lodged, the text will be orange instead of black so you can tell them apart.