diff --git a/programs/svm-spoke/src/instructions/deposit.rs b/programs/svm-spoke/src/instructions/deposit.rs
index e2e6380b7..5f56aa738 100644
--- a/programs/svm-spoke/src/instructions/deposit.rs
+++ b/programs/svm-spoke/src/instructions/deposit.rs
@@ -4,7 +4,10 @@
 // implemented. For more details, refer to the documentation: https://docs.across.to
 
 use anchor_lang::prelude::*;
-use anchor_spl::token_interface::{Mint, TokenAccount, TokenInterface};
+use anchor_spl::{
+    associated_token::AssociatedToken,
+    token_interface::{Mint, TokenAccount, TokenInterface},
+};
 
 use crate::{
     constants::{MAX_EXCLUSIVITY_PERIOD_SECONDS, ZERO_DEPOSIT_ID},
@@ -30,6 +33,7 @@ use crate::{
 pub struct Deposit<'info> {
     #[account(mut)]
     pub signer: Signer<'info>,
+
     #[account(
         mut,
         seeds = [b"state", state.seed.to_le_bytes().as_ref()],
@@ -50,7 +54,8 @@ pub struct Deposit<'info> {
     pub depositor_token_account: InterfaceAccount<'info, TokenAccount>,
 
     #[account(
-        mut,
+        init_if_needed,
+        payer = signer,
         associated_token::mint = mint,
         associated_token::authority = state, // Ensure owner is the state as tokens are sent here on deposit.
         associated_token::token_program = token_program
@@ -64,6 +69,10 @@ pub struct Deposit<'info> {
     pub mint: InterfaceAccount<'info, Mint>,
 
     pub token_program: Interface<'info, TokenInterface>,
+
+    pub associated_token_program: Program<'info, AssociatedToken>,
+
+    pub system_program: Program<'info, System>,
 }
 
 pub fn _deposit(
diff --git a/test/svm/SvmSpoke.Deposit.ts b/test/svm/SvmSpoke.Deposit.ts
index 8b32dcfee..a1d319a23 100644
--- a/test/svm/SvmSpoke.Deposit.ts
+++ b/test/svm/SvmSpoke.Deposit.ts
@@ -12,6 +12,7 @@ import {
   pipe,
 } from "@solana/kit";
 import {
+  ASSOCIATED_TOKEN_PROGRAM_ID,
   ExtensionType,
   NATIVE_MINT,
   TOKEN_2022_PROGRAM_ID,
@@ -163,9 +164,13 @@ describe("svm_spoke.deposit", () => {
       .accounts(calledDepositAccounts)
       .instruction();
     const depositTx = new Transaction().add(approveIx, depositIx);
-    return sendAndConfirmTransaction(connection, depositTx, [payer, depositor]);
+    return sendAndConfirmTransaction(connection, depositTx, [depositor]);
   };
 
+  before(async () => {
+    await connection.requestAirdrop(depositor.publicKey, 10_000_000_000); // 10 SOL
+  });
+
   beforeEach(async () => {
     ({ state, seed } = await initializeState());
 
@@ -730,6 +735,44 @@ describe("svm_spoke.deposit", () => {
     );
   });
 
+  it("Deposits tokens to a new vault", async () => {
+    // Create new input token without creating a new vault for it.
+    await setupInputToken();
+    const inputTokenAccount = await provider.connection.getAccountInfo(inputToken);
+    if (inputTokenAccount === null) throw new Error("Input mint account not found");
+    vault = getAssociatedTokenAddressSync(
+      inputToken,
+      state,
+      true,
+      inputTokenAccount.owner,
+      ASSOCIATED_TOKEN_PROGRAM_ID
+    );
+
+    // Update global variables using the new input token.
+    depositData.inputToken = inputToken;
+    depositAccounts.depositorTokenAccount = depositorTA;
+    depositAccounts.vault = vault;
+    depositAccounts.mint = inputToken;
+
+    // Verify there is no vault account before the deposit.
+    assert.isNull(await provider.connection.getAccountInfo(vault), "Vault should not exist before the deposit");
+
+    // Execute the deposit call
+    await approvedDeposit(depositData);
+
+    // Verify tokens leave the depositor's account
+    const depositorAccount = await getAccount(connection, depositorTA);
+    assertSE(
+      depositorAccount.amount,
+      seedBalance - depositData.inputAmount.toNumber(),
+      "Depositor's balance should be reduced by the deposited amount"
+    );
+
+    // Verify tokens are credited into the new vault
+    const vaultAccount = await getAccount(connection, vault);
+    assertSE(vaultAccount.amount, depositData.inputAmount, "Vault balance should equal the deposited amount");
+  });
+
   describe("codama client and solana kit", () => {
     it("Deposit with with solana kit and codama client", async () => {
       // typescript is not happy with the depositData object