Holdback and prompt payment in Ontario
Ontario's Construction Act does two things that matter to how you get paid: it makes every payer hold back 10% of the price, and since the 2019 prompt payment amendments it puts a clock on paying down the chain. The deadlines are short, they run on a document called a proper invoice, and the clock does not care whether the owner has paid you.
The rules, with sources
Every line below links to the authority it came from and the date we last read it.
| Basic holdback | Every payer under a contract or subcontract where a lien may arise must retain a holdback equal to 10 per cent of the price of the services or materials as they are actually supplied. |
s. 22 (1) ↗
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|---|---|---|
| Owner pays contractor | No later than 28 days after receiving a proper invoice from the contractor, subject to a notice of non-payment. |
s. 6.4 (1) ↗
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| Contractor pays subcontractors | No later than seven days after receiving payment, for the work that was included in that proper invoice. |
s. 6.5 (1) ↗
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| Contractor's lien expiry | 60 days after the earlier of publication of the certificate or declaration of substantial performance, and the date the contract is completed, abandoned or terminated. |
s. 31 (2) ↗
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| Version we read | Consolidation period beginning January 1, 2026; e-Laws currency date September 3, 2026; last amendment 2025, c. 14, Sched. 2. |
source ↗
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Holdback is not retainage you negotiate
The 10% is statutory. It is not a term you win or lose at the negotiating table, and a contract clause that waives it does not help you — the Act says rights under it cannot be waived. The holdback exists so there is a fund available if someone below you registers a lien.
It accrues as the work is supplied, not as a lump at the end, which is why holdback should be a running line on every progress claim rather than a number someone reconstructs at closeout.
The 28 and 7 day clocks run on a proper invoice
Prompt payment starts when a proper invoice is given. If what you sent does not meet the Act's requirements for a proper invoice, the 28-day clock has not started, and the most common way contractors lose a month is by assuming that it has.
The seven days downstream is the part that catches general contractors. Once the owner pays you for work that was in that invoice, you have a week to pay the subs whose work was in it — and that obligation is not conditional on you being happy with the job.
60 days is the whole lien window
A contractor's lien for work up to substantial performance expires 60 days after the earlier of publication of the certificate and the contract being completed, abandoned or terminated. Publication starts a clock that runs whether or not you noticed it, so knowing the publication date on a project you are owed money on is worth more than knowing the rule.
Questions people actually ask
What is the holdback percentage in Ontario?
10 per cent. Section 22(1) of the Construction Act requires every payer under a contract or subcontract where a lien may arise to retain 10 per cent of the price of the services or materials as they are actually supplied.
How long does an owner have to pay a contractor in Ontario?
28 days after receiving a proper invoice, under section 6.4(1), unless the owner gives a notice of non-payment.
How long does a contractor have to pay subcontractors?
Seven days after receiving payment from the owner, under section 6.5(1), for the work that was included in that proper invoice.
How long do I have to register a lien in Ontario?
A contractor's lien for work up to substantial performance expires 60 days after the earlier of the date the certificate or declaration of substantial performance is published and the date the contract is completed, abandoned or terminated — section 31(2).
Can holdback be waived by contract?
No. The holdback in section 22(1) is a statutory requirement on the payer, and the Act does not permit contracting out of rights under it.
GoBuild tracks holdback as a running line on the job rather than a closeout scramble, and keeps the invoice dates that these clocks run from. It will not tell you whether an invoice is a proper invoice — that is a question for your lawyer and your contract.
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This is a plain-English summary written for contractors, not legal or tax advice, and it is not a substitute for reading the source or talking to your accountant or lawyer. Rules change; each line above carries the date we last checked it. If you find something out of date, tell us and we will fix it.