What Ontario’s basic holdback is, how mandatory annual release works since January 1, 2026, and what brokers and sureties should watch — verify at ODACC / ontario.ca.
Last verified: September 28, 2026 (PT)
Part 2 of a Canada payment-law series. Part 1 covers Ontario prompt payment / adjudication and British Columbia’s Construction Prompt Payment Act (Royal Assent, not yet in force): Canada construction payment rules: Ontario & BC.
This page is an education-first briefing for brokers and surety professionals who support Ontario contractors and owners — and for US readers with cross-border books. Holdback is the money held back from progress payments to protect unpaid trades and suppliers. Ontario’s January 1, 2026 amendments made annual release of accrued basic holdback mandatory on longer contracts, with a published notice and a fixed pay window. The goal here is status and watch-outs, not claim strategy or legal advice.
Verify at source / not legal advice. Legislation, regulations, and prescribed forms change. Always confirm in-force wording on ontario.ca (Construction Act), CanLII, ODACC, and the live Ontario Construction Act forms before relying on any timeline on this page. Global Guarantors Learn content is general industry education — not legal, underwriting, or claims advice. Construction payment, lien, and bond rights are jurisdiction-specific; use qualified Canadian counsel.
Holdback is not a “fee.” It is statutory retainage — money kept back from each progress payment so that unpaid trades and suppliers have a pool to look to if someone higher in the pyramid does not pay.
For surety work, holdback timing matters because:
This page maps what changed on January 1, 2026, how the annual-release clock is described in public sources, and high-level watch-outs. It does not prescribe lien steps, invent interaction scenarios, or substitute for counsel or the bond forms.
US readers: think of Ontario’s basic holdback as a statutory retainage regime sitting alongside prompt-payment clocks (Part 1) — not as a Miller Act bond substitute. Holdback, liens, and labour-and-material / payment bonds are related tools with different jobs.
Under Ontario’s Construction Act, a payer who is required to retain the basic holdback keeps back 10% of the price of services or materials as they are actually supplied under the contract. Industry materials (including the Council of Ontario Construction Associations fact sheet on annual holdback release) summarize that rule as coming from section 22 of the Act.
In everyday terms:
The Act and forms also contemplate other holdback-related tools in specific situations, including:
Those are not the annual-release notice. Link the official forms list; do not treat this page as a forms manual: Ontario Construction Act forms.
As of January 1, 2026, for contracts that last longer than one year (subject to transition and exception rules below), owners must make an interim distribution of accrued basic holdback around each anniversary of the owner–contractor contract. Optional annual / phased release is no longer the governing story for covered contracts — mandatory annual release is.
Primary anchors to re-open on publish day:
Form 6 renamed. Older Form 6 was a notice of non-payment of holdback under the former s. 27.1 regime. The current Form 6 is the Notice of Annual Release of Holdback. Always download the live form from Ontario Court Forms — do not reuse a pre-2026 template.
Public industry explainers aligned with the Act’s design (COCA fact sheet; secondary firm notes from Dentons, Norton Rose Fulbright, Cassels, OBA) describe the process as:
| Step | Plain meaning | Typical timing discussed in public sources |
|---|---|---|
| 1. Contract anniversary | The clock for that year’s annual release is keyed to the anniversary of the date the owner–contractor contract was entered into. | Anniversary date |
| 2. Publish Form 6 | Owner publishes a Notice of Annual Release of Holdback stating the amount intended to be released and the intended payment date. | Not later than 14 days after the anniversary |
| 3. Wait / lien check window | Payment is not immediate; a waiting period follows publication so lien status can be considered. | Commonly described as starting after publication |
| 4. Owner pays contractor | Owner pays the holdback amount specified in the notice, unless a claim for lien is preserved or perfected in respect of the contract (as the Act’s payment conditions provide). | No earlier than 60 days and no later than 74 days after the notice is published |
| 5. Downstream cascade | Contractor pays each subcontractor its holdback; the next tier follows. | Not later than 14 days after receiving the holdback payment (unless a lien is preserved/perfected on that subcontract) |
Further anniversaries repeat the interim distribution until the job ends. At the end of a multi-year contract, the remainder of holdback is still released under the Act’s end-of-job rules once liens that may be claimed against the holdback have expired — the same family of rules that apply to shorter contracts. See COCA’s companion “basic holdback” materials and the live statute for final-release timing; do not collapse annual interim release and final release into one clock.
Pending verification (exact s. 26 subsections): Re-quote s. 26(2)–(4) (and any neighbor subsections on cascade / lien impediments) from the live ontario.ca or CanLII text on publish day. This draft’s clocks follow O. Reg. form references, the official Form 6 title/effective date, and consistent public explainers (COCA + multiple secondary firm notes). If any blog conflicts with the statute, the statute wins.
O. Reg. 266/25 directs owners to publish Form 6 on a construction trade news website. Industry notes commonly name the designated Ontario construction trade news websites used for Construction Act notices (often discussed as Daily Commercial News, Link2Build, and Ontario Construction News). Confirm the live designated list in the regulation / ministry materials at publish — do not treat a blog’s list as the official designation if it diverges.
A design point that survived into the in-force package: mandatory annual holdback release operates independently from lien expiry. Earlier draft concepts that would have tied a separate 60-day lien-preservation period to each year’s holdback notice were not the final approach described in post-proclamation explainers (e.g. Dentons, Norton Rose Fulbright). Lien preservation and expiry continue to run from the Act’s established triggers — publication of a certificate of substantial performance, completion, abandonment, or termination of contracts, or last supply where applicable.
Takeaway for brokers: annual release can move cash earlier without “resetting” lien rights on a rolling annual clock. Still verify section 31 on the live statute before advising anyone.
Ontario’s adjudication system (administered by ODACC) can include holdback-payment disputes among adjudicable matters under the regulations (see Part 1 and ODACC’s commencing-an-adjudication guidance / O. Reg. 264/25). That is a process-availability note — not a how-to for starting adjudication from this page.
These transition points appear consistently across primary-adjacent public sources (Bill 216 legislative summary language; COCA; OBA; Norton Rose; Dentons; Cassels). Confirm each against the live Act’s transition sections on publish day.
| Situation | What public sources say |
|---|---|
| Contracts entered on or after January 1, 2026 | Annual release applies; first distribution is keyed to the first anniversary of the contract. |
| Contracts entered before January 1, 2026 | First mandatory annual release is commonly described as falling on the second anniversary of the contract date that occurs after January 1, 2026 — at which point accrued holdback to date is in scope for that release. Example pattern (COCA): a contract entered December 31, 2025 → first Form 6 window within 14 days of December 31, 2027. |
| Very old procurements (Construction Lien Act transition) | Where the contract was entered into or procurement commenced on or before June 30, 2018, existing transition rules (often discussed under s. 87.3) may keep the prior Construction Lien Act framework in play for that improvement — including older lien timing and the absence of the modern prompt-payment / adjudication package. Confirm with counsel. |
| P3 project agreements | Secondary explainers (e.g. OBA) state that certain P3 project agreements entered before January 1, 2026 continue under the pre-2026 holdback-payment regime and are not swept into the new annual-release framework. Flag and verify in the live transition text — do not assume every long public partnership follows the same rule. |
Pending verification (transition & P3): Re-hit the Act’s transition sections and any P3-specific carve-outs on ontario.ca / CanLII before publish. Transition is where blogs most often over-simplify.
Education-level watch-outs only. No claim playbooks. No invented scenarios.
Faster movement of retained funds can change when cash stress appears — or eases — down the pyramid. That may change when an unpaid trade looks to a labour-and-material / payment bond. It does not rewrite bond conditions, notice requirements, or lien deadlines. Point clients to the bond forms, the Act, and qualified counsel.
Pair this page with Part 1 for prompt-payment / adjudication clocks: Canada construction payment rules.
US underwriters supporting Ontario work should not map holdback to US retainage practices or Miller Act timing by instinct. Ontario’s 10% statutory basic holdback and mandatory annual release are Construction Act creatures. Read the solicitation, the contract, and the statute.
This section does not:
Primary / official sources lead. Firm and association pages are secondary orientation only.
Research date: September 28, 2026 (PT). Re-check every Pending verification item, Form 6 version, and ss. 22 / 26 / 31 text on publish day.