Canada Contractor 10% Holdback, Prompt Payment & Change Order Guide (2026–2027)

Short answer: Under Canadian provincial construction lien and prompt payment legislation in 2026–2027, property owners and general contractors must retain a mandatory 10% statutory holdback (7% in Saskatchewan under the Builders’ Lien Act, or 10% in Ontario, BC, Alberta, Manitoba, and Nova Scotia) from each progress payment until the lien preservation period expires (45 to 60 days after substantial performance). Pairing clear 10% holdback tracking with signed change orders and 28-day “Proper Invoices” keeps your cash flow protected.

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Every Canadian general contractor, framing crew, electrician, plumber, roofer, and renovation specialist eventually runs into two cash-flow shocks on larger residential or commercial jobs:

1. The 10% Statutory Holdback: You submit a $20,000 progress invoice (plus GST/HST), and the general contractor or property owner legally holds back 10% ($2,000) in a lien holdback account for 45 to 60 days after substantial completion.
2. Unapproved Change Orders (Extras): You spend $3,400 on extra structural LVL beams, pot lights, or subfloor leveling on a verbal instruction, only to have the owner or GC refuse to pay at completion because there was no signed Change Order (CO) before the work was performed.

This guide breaks down the 2026–2027 provincial holdback percentages, holdback release timelines, federal and provincial 28-day Prompt Payment rules, GST/HST timing on holdbacks, and change order templates across Canada. Compare provincial licensing and clearance rules in our guides to Ontario contractor license requirements, Alberta contractor license requirements, Manitoba contractor license requirements, and WSIB and WorkSafeBC clearance certificates.

How does the 10% statutory construction holdback work by province in 2026–2027?

In every common-law Canadian province, construction and builders’ lien statutes require the payer (the property owner, and each contractor down the subcontract chain) to withhold a statutory percentage—almost universally 10%—from every progress payment to create a protected fund for unpaid subcontractors and material suppliers:

Province / Federal Jurisdiction	Statutory Holdback %	Holdback Release Period (After Substantial Performance / Completion)	Prompt Payment Regime (28-Day Owner → 7-Day Subcontractor Rule)
Ontario (Construction Act)	10%	60 days after publication of Certificate of Substantial Performance (mandatory annual/phased release rules expanding 2026–2027)	In force — 28 days Owner to GC after Proper Invoice; 7 days GC to Sub (or 14-day Notice of Non-Payment)
Alberta (Prompt Payment and Construction Lien Act)	10%	45 days (or 90 days for oil & gas well sites) after Certificate of Substantial Performance	In force — 28 days Owner to GC after Proper Invoice; 7 days GC to Subcontractor
British Columbia (Builders Lien Act)	10% (Shimco holdback account rules on contracts >$100k)	55 days after Certificate of Completion, substantial completion, or abandonment	Builders Lien Act 55-day rule (provincial prompt payment legislation advancing)
Saskatchewan (Builders’ Lien Act)	10% (under SRCA prompt payment)	40 days after substantial performance	In force — 28 days Owner to GC; 7 days GC to Sub
Manitoba (Builders’ Liens Act)	7.5%	40 days after substantial performance or abandonment	Prompt payment framework & 40-day lien clock
Nova Scotia (Builders’ Lien Act)	10%	60 days after substantial performance (plus 31 days for finishing holdback)	Statutory lien holdback & adjudication rules
Federal Crown Projects (Federal Prompt Payment for Construction Work Act)	Per applicable provincial lien rate (typically 10%)	Per provincial lien expiry window	In force — 28 days Canada to GC after Proper Invoice; 7 days down each subcontract tier

Watch Ontario’s 2026–2027 mandatory annual holdback release updates: Following Ontario’s Building Ontario For You Act amendments to the Construction Act, Ontario has moved to make annual release of accrued holdback mandatory on multi-year qualifying contracts where no liens have been preserved, stopping general contractors and owners from sitting on a trade contractor’s 10% holdback for two or three years!

When do you remit GST/HST to the CRA on a 10% construction holdback?

This is one of the most important tax rules in the Canada Revenue Agency’s GST/HST rules for construction holdbacks (Excise Tax Act subsection 168(7)):

• On a normal invoice without a statutory/written holdback: GST/HST is due to the CRA on the earlier of the invoice date or the payment date—even if the client hasn’t paid you yet!
• Special rule for construction holdbacks (Subsection 168(7)): When a holdback is retained under federal or provincial lien legislation OR under a written construction contract for the construction, renovation, or alteration of real property, the GST/HST on the 10% holdback amount does NOT become payable until the earlier of the day the holdback is actually paid or the day the holdback period expires!

How to show a 10% Holdback on your Canadian Progress Invoice:

1. Progress Work Completed This Period (Before Tax): $10,000.00
2. Less: 10% Statutory Construction Holdback (Pre-Tax): −$1,000.00
3. Net Progress Amount Currently Payable (Before Tax): $9,000.00
4. Plus: 13% HST (or 5% GST) on Current Progress ($9,000 × 13%): +$1,170.00
5. Total Due Now (Within 28 Days): $10,170.00
6. Deferred Holdback Balance (Billed upon Lien Expiry): $1,000.00 + $130.00 HST = $1,130.00

Structuring your progress invoice this way ensures you only remit $1,170.00 HST on your current GST/HST return now, and remit the remaining $130.00 HST when the holdback is released 45 to 60 days after completion.

What makes a “Proper Invoice” that triggers the 28-day Prompt Payment clock?

In Ontario, Alberta, Saskatchewan, and on Federal Crown jobs, the 28-day mandatory payment countdown (and the 14-day deadline for an owner to issue a formal Notice of Non-Payment if they dispute anything) does not start until you deliver a statutorily compliant “Proper Invoice”:

1. The contractor’s name, business address, and GST/HST registration number;
2. The date of the Proper Invoice and the period during which the services or materials were supplied;
3. Information identifying the contract, PO, or Change Order under which the work was performed;
4. A clear description, including quantity or percentage of completion, of the services or materials supplied;
5. The amount payable for the services or materials, the 10% holdback calculation, and the payment terms; and
6. The name, title, telephone number, and mailing/email address of the person to whom payment is to be sent.

Use our Canada invoice template and Canada residential renovation GST/HST/PST rules to ensure every field is present.

How do you write an enforceable Canadian Change Order (CO) before doing extra work?

Whether you are renovating a basement in Toronto, framing in Calgary, or rewiring in Vancouver, never touch extra scope without a numbered Change Order. In several provinces (including Ontario’s Consumer Protection Act rules for residential agreements, where exceeding an estimate by more than 10% without an agreed amendment is restricted), a written Change Order is your legal shield:

Change Order Element	Example Entry	Why It Matters
Change Order # & Base Contract Reference	Change Order #CO-03 to Contract #2026-118	Keeps a clean audit trail from original quote to final invoice
Detailed Scope of Addition / Deletion	Supply & install 140 sq ft Schluter Ditra-Heat electric floor warming mat + programmable WiFi thermostat in primary ensuite	Eliminates disputes over what brands or rooms were included
Price Breakdown (Labour + Materials + Tax)	Materials: $780.00 + Labour: $620.00 = $1,400.00 + 13% HST ($182.00) = $1,582.00	Gives a fixed price before work begins
Impact on Schedule / Substantial Completion	Extends tile completion milestone by 2 business days	Prevents delay claims
Payment Terms for the Extra	50% ($791.00) due upon approval; 50% billed on next Progress Invoice (subject to 10% holdback if commercial)	Stops you financing the client’s upgrades

How do you collect your 10% holdback as soon as the provincial lien clock expires?

Put the exact statutory holdback expiry date (45 days in Alberta, 55 days in BC, or 60 days in Ontario after Substantial Performance) in your job calendar the day the project finishes, and send your dedicated Holdback Release Invoice coupled with your updated WSIB or WorkSafeBC Clearance Certificate seven days before the release date.

Frequently asked questions

How much is the statutory construction holdback in Canada and how long is it held?

In Ontario, British Columbia, Alberta, and Nova Scotia, the statutory construction lien holdback is 10% of the price of services and materials supplied (Manitoba is 7.5%). The holdback is held until the provincial lien preservation period expires—45 days after substantial performance in Alberta, 55 days in BC, and 60 days in Ontario—provided no construction liens have been registered against the title.

Do I have to pay GST/HST to the CRA on the 10% holdback before I receive it?

No, provided the holdback is required by federal or provincial construction lien legislation or by a written real-property construction contract. Under Subsection 168(7) of the Excise Tax Act, GST/HST on the 10% holdback only becomes payable on the earlier of the day the holdback is actually paid to you or the day the holdback period expires.

Does the 10% holdback apply to small residential repair jobs in Canada?

Technically, provincial lien legislation applies to “improvements” to land or buildings, though many small one-day residential service calls (such as a $350 plumbing repair or furnace tune-up) are paid 100% upon completion in practice. On larger residential renovations, additions, roofing, or custom home subcontracts, owners and general contractors routinely retain the 10% statutory holdback to protect themselves against subcontractor liens.

What happens if a general contractor doesn’t pay me within 7 days of getting paid by the owner?

Under the Prompt Payment regimes in Ontario, Alberta, Saskatchewan, and on Federal Crown projects, once the owner pays the general contractor (within 28 days of a Proper Invoice), the general contractor must pay each subcontractor within 7 days—or deliver a formal Notice of Non-Payment within the statutory deadline and refer the dispute to fast-track construction adjudication.

Can a Canadian homeowner refuse to pay for extras if I didn’t get a signed Change Order?

If you gave a written estimate or fixed-price contract and performed additional work without a written Change Order or clear text/email approval of the new price, provincial consumer protection laws (such as Ontario’s rule barring charges more than 10% above a written estimate without customer consent to an amended estimate) can prevent you from collecting the unapproved overage.

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This article is general construction and tax information, not formal legal advice. Consult your provincial construction lien statute or a construction lawyer for specific lien deadlines.

Track base quotes, numbered Change Orders, progress invoices, and 10% holdback balances on-device with Keel on the App Store.