Ontario Construction Act 2026: What Changed and What It Means for Contractors

If you’re an Ontario electrician, plumber, or HVAC tech, the rules around getting paid changed on January 1, 2026. Most contractors haven’t heard about it. The Ontario government quietly amended the Construction Act as part of the ongoing prompt-payment rollout that started in 2018, and the changes shift leverage toward contractors, if you know how to use them.

The short version: owners have fewer escape hatches to delay your payment, holdback money now has a mandatory annual release date, and the deficiency notice window was cut in half. That’s good news. The catch: you only get those protections if your invoice qualifies as a proper invoice under the Act. Most trade invoices don’t. For the full picture of how the 28-day rule works, see the Ontario Construction Act prompt payment guide.

By the end of this article you’ll know exactly what changed, what it means for a trades contractor, and what to fix on your invoice template this week.

A two-minute refresher: how Ontario’s prompt-payment rules work

The Ontario Construction Act has required prompt payment since October 2019. The basic chain looks like this:

1. You send a proper invoice to the owner (or general contractor).
2. The owner has 14 days to dispute it in writing. If they don’t dispute, the clock runs.
3. The owner must pay within 28 days of receiving a proper invoice.
4. If you’re a subcontractor, your GC must pay you within 7 days of receiving payment from the owner.
5. If payment is late, interest accrues automatically (currently set at the Bank of Canada prime rate plus 1%, compounding monthly). You don’t need to write a special demand letter.
6. If a dispute can’t be resolved in the 14-day window, either party can refer it to an adjudicator through ODACC , the adjudication body the Act created.

That’s the framework. The 2026 amendments tighten two pressure points: the deficiency notice window and the holdback release schedule.

What changed on January 1, 2026

1. The deficiency notice window dropped from 14 days to 7 days

Two different notices live inside the prompt-payment regime, and contractors regularly conflate them. The 2026 change touches one, not both:

• Deficiency notice (the one that changed). When an invoice is missing required content (a wrong date, a missing remittance address), the payer must flag the deficiency in writing so the contractor can correct and re-issue. As of January 1, 2026, that window is 7 days, down from 14. After day 7, the payer cannot reject the invoice as deficient.
• Notice of Non-Payment (Form 1.1, unchanged). When the payer accepts the invoice as proper but disputes the amount or quality of work, they must serve a Form 1.1 within 14 days. That window did NOT change in 2026. Don’t assume an owner has lost the right to dispute just because day 7 has passed.

Why does the deficiency change matter to you? Because owners and GCs sometimes used the full 14 days as a free extension, sending a nitpicky deficiency notice on day 13 to restart the clock. The 7-day window compresses that tactic. If your invoice is correctly formatted on day 0, you can rely on the clock running uninterrupted.

2. Mandatory annual holdback release

This is the bigger change for most trade contractors. Under the old Act, the statutory 10% holdback sat in limbo until the lien period expired, often 45 to 60 days after substantial completion. In practice, many owners held it much longer, sometimes indefinitely, daring subs to sue for it.

The 2026 amendment creates a mandatory annual release date. If your project spans more than one year, the owner must release the prior year’s accumulated holdback on or before the prescribed date, even if the project isn’t substantially complete. The prescribed date is set in O. Reg. 306/18.

For trades contractors who typically work shorter projects (a few weeks to a few months), the annual release may not apply. But if you work as a sub on a large GC project spanning a full year or more (a condo build, a commercial retrofit), this change means real money comes back to you on a schedule rather than when the GC feels like it.

3. Tightened Form 1.1 content requirements

A Notice of Non-Payment (Form 1.1) now requires more specificity. A general claim like “work not complete” or “deficiencies noted” no longer meets the requirement. The notice must identify the specific deficiency, the specific amount being withheld, and the basis for the dispute.

This matters because a deficient Form 1.1 is treated as no notice at all, which means the 7-day window closes and the owner is obligated to pay. Keep a copy of every invoice you send and the date you sent it. If you receive a Form 1.1, review it carefully against these requirements. A vague notice may not protect the payer.

How this affects your invoicing today

None of the 2026 amendments help you if your invoice isn’t a proper invoice. A proper invoice under the Ontario Construction Act must contain six specific elements. Most trade invoices from QuickBooks or a Word template are missing at least two.

The six required fields:

1. Contractor name and address
2. Invoice date. The date the invoice was issued (not the work date).
3. Contract reference. A description sufficient to identify the contract (job address + contract date works).
4. Period of work. The period during which the work was performed.
5. Amount claimed. The amount of the invoice and the basis for calculation.
6. HST/GST number and tax amount, separately stated.

The most common missing fields are the period of work and the contract reference. If your invoice just says “electrical work: $4,200 + HST” with no job address or date range, it is not a proper invoice under the Act, and the 28-day payment clock does not start.

A compliant invoice might look like: “Electrical work, panel upgrade at 412 Lakeshore Rd., Burlington, per contract dated March 3, 2026. Work performed March 4–14, 2026. Labour and materials as per attached schedule. Subtotal $4,200 + HST (BN 123456789 RT0001) $546 = Total $4,746.”

How this affects your collections process

With the 7-day deficiency window, here is the timeline you should run on every invoice:

ODACC adjudication is faster and cheaper than people expect. For contracts under $50,000, there is no filing fee for the certificate of adjudication. The process typically takes 30–35 days from application to a binding decision. You don’t need a lawyer to file, though having one for a large dispute is wise. Read more on the ODACC website.

Three mistakes that void your prompt-payment protection

1. Sending an invoice with missing fields

An invoice with missing proper-invoice fields does not start the 28-day clock. The owner simply notes the deficiency in their Form 1.1, you reissue a corrected invoice, and the clock restarts from zero. This is the most common way contractors lose months on collections without realizing why.

2. Accepting a verbal promise without getting anything in writing

“We’ll sort it out next week” is not a payment arrangement under the Act. If you verbally agree to wait, you may waive your right to the automatic interest. Any extension should be in writing, even a text message is better than nothing.

3. Missing your lien deadline while waiting on payment

The lien deadline in Ontario is 60 days from the last day you supplied services or materials (as of 2018 amendments). Miss it and you permanently lose the right to register a lien on the property, your most powerful collection tool. Don’t wait for the 28-day clock to expire before checking your lien deadline.

What to do this week

You don’t need to hire a lawyer or rebuild your entire business process. Start here:

• Audit one current invoice. Does it contain all 6 proper-invoice fields? Period of work is the most common miss.
• Update your template. Add a “Work performed” date range field and a contract reference field. This takes 10 minutes in any invoicing tool.
• Set a calendar reminder 7 days and 28 days from your next invoice send date. In that order.
• Bookmark ODACC at odacc.ca Know where to file before you need to.
• On multi-year projects, ask your GC for confirmation of the mandatory annual holdback release date in writing. Get it before the year ends, not after.

This article is for general information only and does not constitute legal advice. For advice specific to your situation, consult a construction lawyer licensed in Ontario.