Construction Subcontracting — Canada: Statutory Holdback and Prompt Payment (Odoo Online)

What this module covers, and what it does not

Construction law is not federal in Canada. The statutory holdback, prompt payment deadlines and lien expiry are set by each province, and the values differ: ten percent in Ontario, seven and a half in Manitoba; sixty days for liens in Ontario, forty clear days in Saskatchewan. A module that claimed to cover “Canada” would have a good share of its users withholding the wrong percentage.

Covered: Ontario (Construction Act, R.S.O. 1990, c. C.30 — the reference regime), Alberta (Prompt Payment and Construction Lien Act, RSA 2000 c P-26.4), Saskatchewan (The Builders' Lien Act, c B-7.1), Manitoba (The Builders' Liens Act, CCSM c B91) and the federal regime (Federal Prompt Payment for Construction Work Act, S.C. 2019, c. 29, s. 387, in force since December 9, 2023, only for projects located on federal real property).

Quebec is not covered, and that is not an oversight. There is no Construction Act in Quebec: the security is the legal construction hypothec under articles 2726 to 2728 of the Civil Code — thirty days after the end of the work to register it, six months to exercise it — and prompt payment falls under a regulation made under the Act respecting contracting by public bodies, in force since September 8, 2025, whose schedule is based on calendar dates: the last day of the month for the public body, the fifth day of the second following month for the contractor, and the tenth for the first-tier subcontractor. Forcing this logic onto the engine used for the other provinces would produce wrong dates.

Nova Scotia is not covered because its values could not be found. nslegislature.ca refused every connection and canlii.org returned 403 on the Builders' Lien Act. Neither the holdback rate, nor the deadlines, nor even the existence of a prompt payment regime could be confirmed from a primary source. A plausible-looking record would be worse than none: it would switch off vigilance.

British Columbia, Newfoundland and Labrador, Prince Edward Island, New Brunswick and the three territories are outside the researched scope.

The three rules that block a payment

1. The holdback is below the statutory rate. The Canadian holdback is not a tax: it is a security. The payer remits nothing to the Treasury; it keeps ten percent to answer for the liens of those who supplied services and materials. If it pays in full and a lien is then registered, it may have to pay a second time.

Section 22(1) of the Construction Act states it plainly: “shall retain a holdback equal to 10 per cent of the price of the services or materials as they are actually supplied.” Not ten percent of the contract price, nor ten percent at the final payment: ten percent of the value supplied as work progresses — and section 22(3) adds that this applies “irrespective of whether the contract […] provides for partial payments or payment on completion.” The refusal names the province, the statute, the rate and the missing amount.

2. No proper invoice is dated. All prompt payment deadlines run from it: twenty-eight days for the owner (s. 6.4(1)), seven days to pay your subcontractor after being paid (s. 6.5(1)), fourteen days to issue a notice of non-payment (s. 6.4(2)). Without its date, none of these deadlines can be demonstrated during an audit — neither the interest you would owe nor the interest you could claim.

3. The holdback release falls outside its window. Since January 1, 2026, annual release has been mandatory in Ontario: a notice published no later than fourteen days after the contract anniversary, then payment “at least 60 days but not later than 74 days after […] the notice […] is published” (s. 26). Releasing before the sixtieth day means releasing before the liens expire — the amount remains owed to lien claimants, and you have already paid it out. Releasing after the seventy-fourth day means being in default. The module refuses both and states the window.

Ontario's January 1, 2026 reform, which earlier documentation ignores

The consolidated text reads “From January 1, 2026 to the e-Laws currency date”, last amended 2025, c. 14, Sched. 2. Four changes:

• annual release of holdback has become mandatory for all contracts (s. 26(2)-(8));

• sections 26.1, 26.2 and 27.1 are repealed — they provided for optional and phased release;

• payment due after an adjudication decision has gone from ten to fifteen days (s. 13.19(2));

• an invoice is deemed compliant if the owner does not report the defect within seven days (art. 6.1(2)).

And a common misremembering, corrected here: the ten-million-dollar threshold does not exist in Ontario. It is an Alberta threshold, set by section 2(1) of regulation AR 23/2022. The twenty-five-million threshold is a Saskatchewan one (s. 46). The Ontario text in force contains no occurrence of “10,000,000”.

What was not confirmed, and the module leaves blank

• The effective date of prompt payment in Alberta. Regulation AR 23/2022, s. 38, only says “comes into force on the coming into force of the Builders' Lien (Prompt Payment) Amendment Act, 2020”, with no date, and the King's Printer table of proclamations is inaccessible. August 1, 2022, the date commonly cited, could not be confirmed: the field is left empty.

• The name of the Ontario adjudication body does not appear in the Act — section 13.2 merely says “The Minister may designate an entity to act as Authorized Nominating Authority”. The numbers of the prescribed forms could not be read: the e-Laws page for O. Reg. 303/18 returns only a JavaScript shell.

Lifting by waiver

None of these blocks is insurmountable, and none can be overridden silently. Overrides are reserved for the manager, require a written reason, record who made the override and when, and post the list of overridden blocks to the payment's chatter.

Sources

ontario.ca/laws/statute/90c30; kings-printer.alberta.ca (P-26.4 and AR 23/2022); publications.saskatchewan.ca (c B-7.1); web2.gov.mb.ca (CCSM c B91); laws-lois.justice.gc.ca (S.C. 2019, c. 29, s. 387, and SOR/2023-269). Accessed on September 14, 2026.