Ontario's Annual Holdback Release Starts in 2027: What Trades Contractors Should Do Now

Since January 1, 2026, Ontario’s Construction Act requires owners to release accrued holdback every year on a contract, instead of sitting on 10% of every payment until the whole job is done. For a trades contractor on a long job, that is real money arriving earlier.

The catch is timing. Because of how the rules phase in, the first annual releases only fall due in 2027. That makes the next few months the time to set yourself up, not to expect a cheque.

How the annual release works

The clock runs from each anniversary of the contract:

1. Notice. Within 14 days after the anniversary, the owner must publish a notice of the annual release of holdback.
2. Waiting period. The owner then waits 60 days from the day the notice is published.
3. Payment. The owner then has 14 days to pay out the holdback that has accrued, unless a lien has been preserved or perfected.

Put together, the money can arrive up to about 88 days after the anniversary: 14 days to publish, 60 days of waiting, and 14 days to pay. It repeats every year the contract runs.

A later amendment (Bill 60) separated this annual release from lien deadlines. Your lien rights still run from the usual events, such as a certificate of substantial performance, or the completion, abandonment or termination of the contract, so an annual release does not shorten them. If you need the dates, our lien deadline calculator works them out for every province.

When it starts for your contracts

Which anniversary counts first depends on when the contract was entered into:

For the older contracts, that first payment covers all of the holdback that has built up to that point, not just one year’s worth. Public-private partnership (P3) agreements entered into before 2026 stay on the old optional rules.

What to do now

1. List your multi-year contracts and their dates

The anniversary is keyed to the contract date, so you need it for every job likely to run past a year. If a contract does not have a clear date, sort that out with the owner or GC now rather than in 2027.

2. Track holdback per contract, as its own balance

You can only check a release if you know what has been held back. Keep a running holdback total for each contract, separate from what you are owed on invoices. Our holdback calculator shows the amount for a single payment.

3. Put the notice window in your calendar

For each contract, mark the anniversary and the 14 days after it. If no notice has been published by the end of that window, ask the owner about it, and talk to a construction lawyer if you do not get a clear answer.

4. If you are a subcontractor, read your subcontract

The rules above describe what the owner must do. How quickly released holdback then passes down the chain to you depends on your contract and the Act’s payment provisions. The summaries we relied on do not spell out a separate timeline for that, so check your subcontract and get advice rather than assuming the money arrives on the owner’s schedule.

5. Know where the GST/HST on holdback goes

If your progress invoices already charged GST/HST on the full amount, holdback included, that tax was reported in the period of each invoice and nothing more is due on release. If they held back the tax on the holdback too, that tax becomes payable on the earlier of the day the holdback is paid to you and the day the holdback period expires, so it belongs on the return for that later period. More in our GST/HST filing checklist.

Sources

• Blakes: Amendments to Ontario’s Construction Act now in force
• Norton Rose Fulbright: Annual holdback release and how it will impact your project
• CRA: GST/HST and home construction (holdbacks)

This article is general information, not legal advice. The Construction Act has detailed transition rules; confirm how they apply to your contracts with a construction lawyer.