diff --git a/app/models/wallet_transaction.rb b/app/models/wallet_transaction.rb
index 6cacaa4cf68..689a9796f91 100644
--- a/app/models/wallet_transaction.rb
+++ b/app/models/wallet_transaction.rb
@@ -4,7 +4,10 @@ class WalletTransaction < ApplicationRecord
   include PaperTrailTraceable
 
   belongs_to :wallet
+
+  # these two relationships are populated only for outbound transactions
   belongs_to :invoice, optional: true
+  belongs_to :credit_note, optional: true
 
   STATUSES = [
     :pending,
@@ -53,16 +56,19 @@ class WalletTransaction < ApplicationRecord
 #  transaction_type                    :integer          not null
 #  created_at                          :datetime         not null
 #  updated_at                          :datetime         not null
+#  credit_note_id                      :uuid
 #  invoice_id                          :uuid
 #  wallet_id                           :uuid             not null
 #
 # Indexes
 #
-#  index_wallet_transactions_on_invoice_id  (invoice_id)
-#  index_wallet_transactions_on_wallet_id   (wallet_id)
+#  index_wallet_transactions_on_credit_note_id  (credit_note_id)
+#  index_wallet_transactions_on_invoice_id      (invoice_id)
+#  index_wallet_transactions_on_wallet_id       (wallet_id)
 #
 # Foreign Keys
 #
+#  fk_rails_...  (credit_note_id => credit_notes.id)
 #  fk_rails_...  (invoice_id => invoices.id)
 #  fk_rails_...  (wallet_id => wallets.id)
 #
diff --git a/db/migrate/20241010055733_add_reference_to_credit_note_from_wallet_transaction.rb b/db/migrate/20241010055733_add_reference_to_credit_note_from_wallet_transaction.rb
new file mode 100644
index 00000000000..55b37b30a70
--- /dev/null
+++ b/db/migrate/20241010055733_add_reference_to_credit_note_from_wallet_transaction.rb
@@ -0,0 +1,9 @@
+# frozen_string_literal: true
+
+class AddReferenceToCreditNoteFromWalletTransaction < ActiveRecord::Migration[7.1]
+  disable_ddl_transaction!
+
+  def change
+    add_reference :wallet_transactions, :credit_note, type: :uuid, null: true, index: {algorithm: :concurrently}
+  end
+end
diff --git a/db/migrate/20241011123148_add_foreign_key_constraint_to_credit_note_id_at_wallet_transaction.rb b/db/migrate/20241011123148_add_foreign_key_constraint_to_credit_note_id_at_wallet_transaction.rb
new file mode 100644
index 00000000000..4f4a539b72b
--- /dev/null
+++ b/db/migrate/20241011123148_add_foreign_key_constraint_to_credit_note_id_at_wallet_transaction.rb
@@ -0,0 +1,7 @@
+# frozen_string_literal: true
+
+class AddForeignKeyConstraintToCreditNoteIdAtWalletTransaction < ActiveRecord::Migration[7.1]
+  def change
+    add_foreign_key :wallet_transactions, :credit_notes, validate: false
+  end
+end
diff --git a/db/migrate/20241011123621_change_validate_on_foreign_key_from_wallet_transaction_to_credit_note.rb b/db/migrate/20241011123621_change_validate_on_foreign_key_from_wallet_transaction_to_credit_note.rb
new file mode 100644
index 00000000000..096fe03457d
--- /dev/null
+++ b/db/migrate/20241011123621_change_validate_on_foreign_key_from_wallet_transaction_to_credit_note.rb
@@ -0,0 +1,7 @@
+# frozen_string_literal: true
+
+class ChangeValidateOnForeignKeyFromWalletTransactionToCreditNote < ActiveRecord::Migration[7.1]
+  def change
+    validate_foreign_key :wallet_transactions, :credit_notes
+  end
+end
diff --git a/db/schema.rb b/db/schema.rb
index 75244a8931a..d35ae1919df 100644
--- a/db/schema.rb
+++ b/db/schema.rb
@@ -10,7 +10,7 @@
 #
 # It's strongly recommended that you check this file into your version control system.
 
-ActiveRecord::Schema[7.1].define(version: 2024_10_08_080209) do
+ActiveRecord::Schema[7.1].define(version: 2024_10_11_123621) do
   # These are extensions that must be enabled in order to support this database
   enable_extension "pgcrypto"
   enable_extension "plpgsql"
@@ -1133,6 +1133,8 @@
     t.integer "transaction_status", default: 0, null: false
     t.boolean "invoice_requires_successful_payment", default: false, null: false
     t.jsonb "metadata", default: []
+    t.uuid "credit_note_id"
+    t.index ["credit_note_id"], name: "index_wallet_transactions_on_credit_note_id"
     t.index ["invoice_id"], name: "index_wallet_transactions_on_invoice_id"
     t.index ["wallet_id"], name: "index_wallet_transactions_on_wallet_id"
   end
@@ -1296,6 +1298,7 @@
   add_foreign_key "subscriptions", "plans"
   add_foreign_key "taxes", "organizations"
   add_foreign_key "usage_thresholds", "plans"
+  add_foreign_key "wallet_transactions", "credit_notes"
   add_foreign_key "wallet_transactions", "invoices"
   add_foreign_key "wallet_transactions", "wallets"
   add_foreign_key "wallets", "customers"