When you refund a customer there are two ways you can handle the refund in Solo:
Categorise the refund expense as 'General merchandise'.
Or, simply archive the refund and the original income transaction (you can also edit the income transaction if it's only a partial refund).
Either of these options will cancel out the original income transaction on your tax return.
When a payment you have made is refunded to you there are also two ways you can handle the refund in Solo:
Categorise the refunded income as 'Zero-rated supplies' (if the payment had no GST) or 'Self-employed income' (if the payment did include GST).
Or archive the refund and the original expense transaction (you can also edit the expense transaction if it's only a partial refund).
Either of these options will cancel out the original expense transaction on your tax return.