How much deposit should you ask for? Most Ontario contractors land somewhere between 10% and 33% of the contract value, but there is no single right answer, and there is no statutory deposit limit for most construction work in Ontario. The right deposit depends on the job type, the customer type, your material risk, and your cash-flow tolerance.
This article walks through the rules that DO apply, the industry norms by job type, and a simple framework for setting a deposit that protects you without scaring off the customer.
What the law says about deposits in Ontario
Construction Act: silent. The Act does not impose a maximum deposit, a minimum deposit, or any specific deposit rule for commercial or residential construction work. Deposits are contractual, whatever you and the customer agree to in writing.
Consumer Protection Act, 2002: this is the one to know about. Section 25 covers direct sales contracts (contracts negotiated at a place other than the supplier’s usual place of business, for example, a sales rep visiting a homeowner). If your contract is a direct sales contract, consumers have a 10-day cooling-off period during which they can cancel without reason. Specific rules also apply to advance payment for future services. Most one-off contractor work at the homeowner’s site falls into this category, so a long-tail deposit followed by months of work creates rescission risk.
Critically, the Consumer Protection Act does not cap deposits at any specific percentage for construction work. The 10% figure that floats around online refers to a different industry altogether and is not statutory.
Industry norms by job type
Here is what most Ontario trades contractors actually charge, based on industry surveys and trade-association guidance. These are norms, not rules.
| Job type | Typical deposit | Reasoning |
|---|---|---|
| Small residential service (electrical service call, plumbing repair) | 0% or flat dispatch fee | Sub-$1K, completed in one visit; bill on completion |
| Kitchen / bathroom renovation ($15-50K) | 20-33% | Material lock-in, scheduled crew time, custom orders |
| Roof replacement ($8-20K) | 33-50% | Heavy material cost paid up front to supplier |
| HVAC install ($10-25K) | 33-50% | Equipment ordered to spec, supplier deposit required |
| Custom millwork / cabinetry | 50% | Made-to-order with non-resellable materials |
| New construction (residential) | 10-15% | Holdback regime + progress draws cover the cash flow |
| Commercial sub-contract | 0-10% | Holdback regime + progress draws; deposit unusual |
A simple framework for setting your deposit
The deposit exists to cover two things: material risk (the cost of stuff you have to order or buy before you start) and commitment risk(the cost of holding a slot in your schedule that you can’t back-fill if the customer cancels). Calculate both, then pick the higher.
Material risk
For any job with significant up-front material orders, the deposit should cover at least 100% of the non-refundable supplier deposits plus 50% of the rest of the materials. Example: a $25,000 kitchen renovation with $8,000 in custom cabinet orders (non-refundable supplier deposit) and $4,000 in standard materials. The material-risk deposit is $8,000 + ($4,000 × 0.5) = $10,000, or 40% of contract.
Commitment risk
For schedule-driven work, the deposit should cover the opportunity cost of the slot you’re holding. If a kitchen reno takes two weeks of your crew at $4,000/week of labour gross margin, and another project would generate similar margin, the commitment-risk deposit is 1-2 weeks of margin = $4-8K. For a $25,000 reno that is 16-32% of contract.
Pick the higher of the two
If material risk says 40% and commitment risk says 25%, charge 40%. Round to a clean percentage. Tell the customer plainly: the deposit covers your supplier orders and the time held for their project.
Don’t over-rely on the deposit, use progress draws
A 33% deposit on a 6-week job leaves you holding 67% of the work before the next payment. That’s a cash-flow trap. The better structure for any job longer than two weeks is:
- Deposit on signing (covers material + commitment risk).
- Progress draw 1 at a defined milestone (rough-in complete, drywall up, etc.).
- Progress draw 2 at the next milestone.
- Final invoice on substantial completion (subject to 10% statutory holdback in ON Construction Act work).
Each progress draw is a separate proper invoice under section 6.1 and triggers its own 28-day payment clock. Stacking deposit + progress draws + holdback gets you to a much smoother cash-flow profile than relying on a single big deposit.
Put the deposit in writing before you start
Three things to lock down in the contract or signed quote:
- The deposit amount (dollar figure and percentage).
- What the deposit is for (materials, scheduling, both).
- The refund rule. Under the Consumer Protection Act’s direct-sales rules, residential customers have a 10-day cooling-off period, your contract should reflect that. After the cooling-off period, the contract terms govern.
This article is general information for Ontario trades contractors, not legal advice. Deposit rules can intersect with the Consumer Protection Act, 2002 for residential work and with industry practice norms. For high-value or unusual contracts, confirm with a lawyer licensed in Ontario before locking in your deposit structure.