The Ontario Contractor's Guide to Holdback and the Construction Act

Every Ontario contractor knows the 10% number. Far fewer have a reliable answer to the question that actually matters: how much holdback is owed to us right now, across every active and recently closed job, and when is each dollar of it due? Holdback is earned money with a delay attached, and money with a delay attached has a way of going missing.

This is a plain-English operational guide, not legal advice. For the statute itself, your construction lawyer is the right call. For keeping track of the money, read on.

How the statutory holdback flows through a job

Ontario's Construction Act requires owners to hold back 10% of the price of services and materials as they're supplied. That holdback exists to protect lien claimants, and it cascades down the chain: the owner holds back on the general, and the general holds back on every subcontractor. The money is earned as the work is done, it just can't be paid out until the lien period tied to the work has expired.

It runs in both directions

If you're a GC, holdback is simultaneously an asset and a liability: there's holdback receivable being held on you by the owner, and holdback payable you're required to hold on your subs. Subcontractors have the same structure one level down. Any tracking approach that only watches one direction is giving you half the picture, and the half you're ignoring is usually the one that generates the angry phone call.

Release day: where spreadsheet tracking fails

Holdback release is triggered by events, publication of the certificate of substantial performance and the expiry of the lien period that follows it, not by a date someone wrote down at contract signing. Jobs finish late, substantial performance gets certified on a different day than anyone projected, and the spreadsheet that tracked 'holdback due March' is now wrong and nobody owns updating it. We've met contractors with six figures of releasable holdback that simply hadn't been invoiced, not because of a dispute, but because no one was watching the trigger.

Prompt payment changes the tempo

The Construction Act's prompt payment regime puts hard timelines on the whole chain: once a proper invoice is submitted, the owner is on a 28-day clock to pay, and contractors are on a 7-day clock to pay subs after receiving payment. Disputes have their own fast adjudication track. Operationally, that means invoicing discipline is no longer optional, a late or defective invoice doesn't just delay your money, it resets statutory clocks that your subs are counting on too.

Tracking holdback natively in your ERP

• Retainage on both AR and AP sides, set at the contract level, so the 10% is withheld and accrued automatically on every billing
• Holdback receivable and payable visible as real GL balances, not memo fields in a spreadsheet
• Release workflows that generate the holdback invoice the moment the release conditions are met
• Reporting by project and by counterparty, so 'how much holdback is out there?' is a thirty-second question

Acumatica Construction Edition handles retainage natively in both directions, which is most of the battle. Configured once at project setup, the 10% follows every progress billing automatically, and release day becomes an invoice to send rather than an archaeology project.

Holdback is the rare problem that's entirely solvable with structure. The statute tells you exactly how the money moves. The only question is whether your systems can see it.