Construction holdbacks in Ontario, explained
Ten percent of every invoice you send is money you cannot spend yet. If you price and schedule as if you can, the holdback quietly eats your margin. Here is how it actually works.
What the holdback is
Ontario's Construction Act requires anyone paying for construction work — the owner paying you, or you paying your subs — to hold back 10% of the value of work certified on each payment. It is not optional and it is not negotiable in the contract: the statutory holdback exists to protect subcontractors and suppliers further down the chain, who can register a lien against the property if they go unpaid.
When you get it back
The basic holdback becomes payable after substantial performance of the contract is certified and published, and the lien period that follows it expires with no liens preserved. In practice: certificate published → 60-day lien window runs → holdback released. On long projects, annual or phased holdback release can apply if the contract provides for it.
The practical consequence: the last 10% of your contract value arrives months after the work is done. A $600k build means $60k of your revenue is on a statutory timer you do not control.
Prompt payment changes the rhythm
Since the prompt-payment rules came into force, the clock is defined by the proper invoice: an owner has 28 days to pay after receiving one, and a contractor who gets paid must pay its subcontractors within 7 days. Disputes have to be raised through a notice of non-payment and go to adjudication — silence is no longer a payment strategy. Your invoicing discipline (dates, contents, delivery) is now the difference between predictable cashflow and an unenforceable pile of receivables.
What this means for how you run projects
- Track holdback as its own number, per project — not buried in accounts receivable. You need to know what is retained, by whom, and what date starts its release clock.
- Model cashflow with the 10% out,so a “profitable” project does not go cash-negative in month four.
- Certify substantial performance promptly. Every week the certificate is not published is a week added to the statutory timer on your money.
- Mirror the obligations downward. You must hold back from your subs the way the owner holds back from you — and release on the same statutory schedule.
JobSite tracks holdbacks per invoice, schedules their release, and feeds both into per-project cashflow projections — see how the invoicing module works.
This guide is general information about Ontario's construction payment regime, not legal advice. Timelines and obligations depend on your contracts — confirm specifics with a construction lawyer.