A proper invoice is an invoice that meets the requirements of section 6.1 of the Ontario Construction Act. It must include specific fields that US-built invoice templates typically omit. A proper invoice is the trigger for the 28-day payment clock under Ontario's prompt-payment rules. If your invoice does not qualify, the payer can issue a deficiency notice and the clock never starts. You are then back to waiting indefinitely, with no legal protection. The proper-invoice standard applies to virtually all construction contracts in Ontario, including residential renovations.
Why it matters to Canadian contractors
- The 28-day payment clock under the Ontario Construction Act only starts when the payer receives a proper invoice. A non-qualifying invoice gives you no legal payment deadline whatsoever.
- As of January 1, 2026, payers must issue a deficiency notice within 7 days of receiving a deficient invoice. After 7 days, they cannot reject it as deficient. This change protects contractors from payers who sit on invoices for weeks before flagging technical problems.
- Most Canadian trades contractors using Word templates or US-built software are not sending proper invoices right now. This means none of their 28-day protections are active.
- Proper invoices are also necessary for your customers to claim HST Input Tax Credits. An invoice missing your Business Number cannot support an ITC claim.
Common mistakes and pitfalls
- The period of work (a date range, not just an invoice date) is the most commonly missing field. An invoice dated April 15 with no indication of when the work was done is not a proper invoice.
- A contract reference is required. Simply writing the customer's name is not sufficient. Include the job address, contract number, or purchase order number.
- Payment recipient details must be explicit, meaning the name, title, mailing address, and phone number of the person who should receive payment. This cannot be implied from letterhead.
- Contracts can add requirements on top of the statutory minimums. Always check your contract before invoicing on larger commercial or ICI jobs.
- The HST amount must be stated separately from the base amount, and your Business Number must appear on the invoice. A combined total with HST buried inside does not qualify.
Related
- Proper invoice requirements: full checklist→
- Ontario Construction Act prompt payment guide→
- Glossary: Holdback→
- How the 28-day rule works→
This glossary entry is for general information only and does not constitute legal or tax advice. Canadian tax and construction law rules vary by province and contract. For advice specific to your situation, consult a licensed professional.