Statutory holdback is a percentage of every payment that owners and general contractors must retain in trust until lien rights expire. In Ontario, BC, and Alberta the rate is 10 percent; Manitoba is 7.5 percent. It is not optional and cannot be waived by contract. The hard part is tracking it: holdback is calculated on the pre-tax base, a separate amount accrues on every subcontract, and the release date is tied to the lien period, not the project completion date.
Why tracking it by hand goes wrong
- Holdback is calculated on the base amount before HST. Calculating it on the tax-included total over-withholds.
- The release date is tied to lien-period expiry, not the completion date. In Ontario the lien period is 60 days from the last supply.
- A separate holdback must be tracked for each subcontract, not pooled across the whole project.
- In Ontario, annual holdback release became mandatory on January 1, 2026 under Bill 216 and Bill 60: the payer must publish a notice within 14 days of each contract anniversary, then pay the released holdback 60 to 74 days after that notice.
- Quebec has no statutory holdback. Retention there is contractual under the Civil Code.
How Markup handles it
Per-province rates
Markup applies 10% in Ontario, BC, and Alberta, 7.5% in Manitoba, and the correct treatment where no statutory holdback exists.
Per-contract tracking
Holdback accrues separately on each contract as its own liability, not as one pooled figure for the whole project.
Release-date timeline
Release dates are projected from the lien period for each contract, so the cash you are owed is visible.
2026 annual-release tracking
Ontario's anniversary notice and payment-window deadlines are tracked so you do not miss the annual-release cascade.
Frequently asked questions
What is statutory holdback?
It is a mandatory percentage of each construction payment that the payer must retain in trust until lien rights expire. It acts as a fund subcontractors and suppliers can claim against if they are not paid.
How much is construction holdback in Ontario?
10 percent of each payment, held in trust until the lien period expires. The rate is also 10 percent in BC and Alberta, and 7.5 percent in Manitoba.
Is holdback calculated before or after HST?
On the base amount before HST. Calculating it on the tax-included total results in over-withholding.
What changed for holdback in Ontario in 2026?
Annual release became mandatory on January 1, 2026 under Bill 216 and Bill 60. The payer publishes a notice of annual release within 14 days of each contract anniversary, then pays the released holdback 60 to 74 days after that notice.
Is Markup's holdback software free?
Holdback tracking is part of the Plus plan. Every new account gets a 14-day free trial of Plus with no card required, and the holdback calculator tool is free to use anytime.
This page is general information only and does not constitute tax or legal advice. CRA rules and filing thresholds can change. For advice specific to your situation, consult a licensed professional.