Progress billing · Quebec
Construction holdback in Quebec: release tracker and checklist
Separate accumulated holdback, the release request, the customer decision, and the payment. Copy the register, reconcile the balance, and verify every condition before sending.
Key takeaways
A construction holdback is part of an amount due that remains temporarily unpaid to secure obligations defined by the project rules. It does not disappear from your records when the customer accepts a payment application. It remains a separate balance until it is released and collected.
Track four totals separately:
- holdback accumulated from the start of the project;
- the portion requested for release;
- the portion accepted for release but not yet collected;
- the portion actually collected.
The outstanding holdback balance is accumulated holdback − releases collected. A release request or decision does not yet reduce this balance.
This guide gives you a copyable tracker, a worked partial-release example, and a review checklist. The contract and applicable rules determine the basis, rate, conditions, and release timing. There is no 10% rate that automatically applies to every Quebec construction project.
What is a construction holdback?
The Office québécois de la langue française defines a holdback as an amount a customer temporarily keeps from sums due to a contractor to help secure proper performance. It lists holdback and retention as English equivalents for the French term retenue de garantie.
That definition explains the concept. It does not create a right to withhold money. Start with the signed contract or subcontract, the current project instructions, and the rules that actually apply to the project.
Do not classify every difference as holdback:
Scroll the table horizontally to see every column.
| Event | What it means | What to keep |
|---|---|---|
| Holdback | An otherwise payable amount is temporarily withheld under a clause or applicable rule. | Basis, rate or amount, purpose, release conditions, and source. |
| Refusal | The recipient disputes payment of all or part of the amount claimed. | Notice, reasons, affected work, amount, and payment-application revision. |
| Deduction | An amount is subtracted for a separate reason allowed by the contract or an applicable rule. | Calculation, notice, source, and affected amount. |
| Correction | An earlier value was wrong and must be corrected without erasing history. | Old value, new value, reason, approval, and revision. |
| Unpaid balance | An accepted, invoiced, or due amount has not yet been collected. | Decision, invoice if required, due date, follow-ups, and payments. |
One project can contain several of these events. Give each one its own line. An ordinary performance holdback should not absorb a partial refusal, a calculation correction, or an amount tied to deficiencies.
Set the project rule before calculating
Do not copy a percentage from an older job. Before the first payment application, the billing owner should be able to show the text that authorizes the holdback and answer these questions.
- Contract or subcontract identifier
- Direct customer and your company's position in the contract chain
- Current clause, schedule, or applicable rule, with a link to its source
- Holdback method: percentage, fixed amount, or another written method
- Calculation basis: work, materials, changes, or other included items
- Rate, limit, or amount and the rounding rule
- Tax treatment confirmed by the responsible person
- Event that permits a release request
- Documents, corrections, receipts, or other evidence required
- Person who confirms the condition and person authorized to approve sending
- Submission channel and proof to retain
When a clause changes, keep the earlier settings. Create a new version with an effective date and connect each application to the settings used for its calculation. The construction schedule-of-values guide explains how to keep the contract value and measurable work lines in balance.
Tax remains a separate checkpoint. The Canada Revenue Agency describes a specific GST/HST timing rule when federal or provincial law or a written construction agreement requires a holdback. The timing then depends in part on payment of the holdback or expiry of the holdback period. Review the CRA's official construction guidance and have the GST and QST treatment confirmed by the person responsible for tax. This guide does not calculate tax or determine a reporting period.
Copy the holdback tracker
Use one row per event. A monthly application that adds holdback, a release request, a release decision, and a payment are four events even when they concern the same money.
Scroll the template horizontally, then copy its contents.
Project Holdback ID Event ID Event type Parent event ID Allocation ID Source event or revision Application or revision Event date Source Opening balance Pre-tax basis Rate Holdback movement (+/−) Release requested Release accepted Release collected Outstanding holdback balance Status Evidence Owner Next actionGive the holdback a stable identifier such as HB-004. Connect PA-06-v1, REL-01-v1, DEC-01, and PAY-04 to it. In the source-event field, record DEC-01 → REL-01-v1 and PAY-04 → DEC-01. If one decision covers two holdbacks, use DEC-01 as the parent event and record allocations DEC-01-A1 and DEC-01-A2. Apply the same pattern to a combined payment, for example PAY-04-A1 and PAY-04-A2. The allocations must total the exact parent event. This structure lets you reconcile every dollar without relying on a free-form note.
For an existing project, create one dated opening-balance event and retain the source of the imported amount. A new project starts at CAD 0. Do not add movements already included in the opening balance.
Keep three subtotals beside the event list:
- accepted but not collected: accepted release minus cash allocated to that decision;
- still held after the decision: outstanding holdback balance minus the accepted but uncollected release;
- outstanding holdback balance: accumulated holdback minus all holdback releases actually collected.
Each total answers a different question: what remains to be received, what already has a favourable release decision, and what remains subject to a release condition?
Roll the balance forward each month
First calculate cumulative holdback on the basis required by the contract. Subtract the prior cycle's cumulative holdback to isolate the current movement.
Current holdback added = new cumulative holdback − prior cumulative holdback.
The outstanding-balance formula is different:
Outstanding holdback balance = accumulated holdback − releases collected.
Check the result a second way. Start with the opening balance, add current holdback and any upward corrections, then subtract downward corrections and releases collected. This event roll-forward must equal the balance rebuilt from the complete history.
Do not automatically use the total contract value as the basis. The contract may include only selected work, use a fixed amount, or change the basis when approved changes enter the project value. The complete construction progress-billing guide explains the full application calculation. Here, the task is to preserve the holdback movement after that calculation.
Move a release from evidence to cash
A controlled release follows an explicit sequence.
- Confirm the triggering event. Identify the clause or rule, the work or line involved, and the person who confirms that the condition has been met.
- Reconcile the balance. Check the opening amount, every holdback addition, every correction, and every earlier release collected.
- Separate disputed amounts. A deficiency, damage item, refusal, or deduction keeps its own reason and evidence.
- Prepare a versioned release request. Name the holdback, amount requested, condition relied on, and attached documents.
- Obtain internal approval. Keep the authorized person's name, approval date, and approved revision.
- Send and retain proof. Record the recipient, channel, time, and acknowledgement.
- Record the response and payment separately. A partial decision creates an accepted but uncollected amount. The outstanding holdback balance decreases only when payment is received and allocated.
If the customer asks for a receipt, release, waiver, declaration, or notice, have the appropriate document reviewed before signing it. This guide does not provide a legal form. Proof of payment and a waiver of rights do not necessarily have the same effect.
Covered Quebec public contracts: identify the holdback type
This section applies only to contracts and subcontracts covered by Quebec's Regulation respecting prompt payments and the prompt settlement of disputes with regard to construction work. Start with the Quebec prompt-payment applicability calendar. Do not apply this table to a private, municipal, federal, or excluded contract.
Scroll the table horizontally to see every column.
| Situation | Official reference | Separate field to track |
|---|---|---|
| Performance holdback provided by the public contract | Section 20 caps the holdback at 10% of the amount due. A downstream percentage cannot exceed the percentage applied upstream. The public contract must provide the right and its terms. Each subcontracting tier needs a prior written agreement between the affected parties. | Amount due, upstream rate, downstream rate, public-contract clause, written-agreement reference and date, and claim conditions. |
| Acceptance of the work | Section 21 connects the performance-holdback claim to acceptance of the work and provides a path when acceptance is delayed. | Acceptance date and proof, notice if used, and the application revision claiming the amount. |
| Apparent defects or poor workmanship | Section 22 limits the amount to what is sufficient to satisfy the reservations. At acceptance, available section 20 holdback counts first. Sufficient security guaranteeing the affected obligations prevents this holdback. | Reservation, evidence, repair estimate, section 20 amount applied, incremental amount, subcontractor allocation, security offered, and decision. |
| Damage to the work or renovated immovable | Section 23 limits the amount to what is sufficient to repair damage caused by the contractor or a subcontractor. It can be allocated to the responsible subcontractors. Sufficient security guaranteeing these obligations prevents this holdback. | Damage, cause, evidence, repair estimate, responsible party, allocation method, security offered, and decision. |
| Claim of a subcontractor | Section 25 concerns money the public body previously paid the contractor for that subcontractor's work. The contractor can reclaim the amount as it pays the claim. Sufficient security guaranteeing the claim prevents this holdback. | Subcontractor, prior public-body payment, claim, payment made, amount held, and security offered. |
| Claim of another specified creditor | Section 26 concerns another creditor that can assert a legal hypothec, denounced its contract to the public body, and claims only work, materials, or services supplied after denunciation. Sufficient security guaranteeing the claim prevents this holdback. | Creditor, asserted right, denunciation and receipt date, post-denunciation allocation, payment, and security offered. |
| Claim for a held amount | Section 24 permits a claim after the public body declares itself satisfied with the repairs or corrections for the defects, poor workmanship, or damage covered by sections 22 and 23. It also provides a written-notice and claim path when that evaluation is delayed. Section 27 requires the amount to be included in a compliant payment application. For sections 25 and 26, the receipt or permitted declaration must support the amount paid. | Satisfaction declaration or written notice, condition met, evidence, application revision, amount paid, receipt or declaration, and decision received. |
| Final payment application | Section 28 lets the public body keep payable sums while the specified CNESST confirmation, final subcontractor receipts, and other contract documents are missing. | Required document, responsible actor, deadline, revision received, and acceptance evidence. |
| Underlying obligation not performed | Section 29 applies when the contractor does not perform the obligation behind the holdback within a reasonable time after being informed. The public body is then not required to pay the held amount and may, when applicable, use it to perform that same obligation or have it performed. | Date, method, and proof of information; exact obligation; basis for the reasonable period; due date; performance; decision; amount used; and unused balance. |
| Holdback initiated by a contractor | Sections 30 and 31 require a prior written agreement, prohibit the specified duplication, and put the release claim in a payment application. | Parties, purpose, written terms, duplication check, and release application. |
Section 20's 10% cap belongs to this specific regime. It does not prove that your holdback is 10% or that the regulation covers your project. The official Secrétariat du Conseil du trésor guide explains these sections with examples. The sufficiency of any security depends on the file. Sources were checked September 10, 2026.
Example: a release accepted in part and paid in part
Consider a fictional CAD 240,000 subcontract before tax. For this example only, the signed contract provides a 5% holdback on cumulative eligible value. Tax, changes, refusals, deductions, and the legal effect of any release form are outside the example.
The first application brings cumulative eligible value to CAD 60,000, so cumulative holdback is CAD 3,000. The second brings cumulative value to CAD 130,000, so cumulative holdback is CAD 6,500. The second period adds CAD 3,500 of holdback.
A contract condition is then met. The contractor requests release of CAD 3,000. The customer accepts CAD 2,500 for release, then pays CAD 2,000. The table below uses the same fields as the copyable register. Each opening balance carries forward the prior row's closing balance.
Scroll the table horizontally to see every column.
| Event | Related event | Opening balance | Holdback movement | Release requested | Release accepted | Release collected | Outstanding holdback balance |
|---|---|---|---|---|---|---|---|
OPEN-01 | n/a | CAD 0 | CAD 0 | CAD 0 | CAD 0 | CAD 0 | CAD 0 |
PA-01 | n/a | CAD 0 | + CAD 3,000 | CAD 0 | CAD 0 | CAD 0 | CAD 3,000 |
PA-02 | PA-01 | CAD 3,000 | + CAD 3,500 | CAD 0 | CAD 0 | CAD 0 | CAD 6,500 |
REL-01-v1 | PA-01, PA-02 | CAD 6,500 | CAD 0 | CAD 3,000 | CAD 0 | CAD 0 | CAD 6,500 |
DEC-01 | REL-01-v1 | CAD 6,500 | CAD 0 | CAD 0 | CAD 2,500 | CAD 0 | CAD 6,500 |
PAY-04 | DEC-01 | CAD 6,500 | CAD 0 | CAD 0 | CAD 0 | CAD 2,000 | CAD 4,500 |
The CAD 4,500 balance consists of CAD 500 accepted but not collected and CAD 4,000 still held. Keep the CAD 500 in a release-follow-up queue until accounting recognizes a receivable. Track whether an invoice is required, whether it was issued, and when the amount becomes due as separate fields. The CAD 4,000 still needs a release condition or decision. Do not add the CAD 500 to holdback again or subtract it before payment arrives.
Correct exceptions without losing history
The wrong rate was used. Keep the submitted calculation, create a correction linked to the affected application, and approve a new revision. Do not silently rewrite prior balances.
The basis does not match the contract. Identify the included and excluded lines. Rebuild the cumulative value on one basis before calculating the current movement.
A decision addresses only selected deficiencies. Allocate the decision to each affected issue. Do not mark the full holdback released because one correction was accepted.
Final documents are missing on a covered public contract. Keep one row per document with its owner, deadline, revision, and receipt evidence. A missing document is not merely a comment on the holdback line.
One payment covers several items. Keep the bank total, then allocate it separately to invoices, holdback releases, and other balances. The allocations must equal the exact cash received.
Tax treatment is not confirmed. Do not let the spreadsheet choose the collection date. Confirm the tax event from the law, written agreement, issued documents, and actual payment.
Checklist before requesting a holdback release
- The clause, applicable rule, and current version are in the project record.
- The holdback ID and every application that created it are known.
- The opening balance agrees with the last approved register.
- Each holdback addition, correction, and collected release appears once.
- The release condition and the person confirming it are recorded.
- Deficiencies, damage, refusals, and deductions remain on separate lines.
- The requested amount links to the affected work, documents, and evidence.
- The request has a revision ID and the required internal approval.
- The recipient, channel, date, and transmission proof are retained.
- The response separates the accepted amount, unaccepted amount, and remaining conditions.
- Cash is allocated to the exact decision before the balance is reduced.
- Invoice, tax, and accounting treatment have been confirmed by the responsible person.
- The next action, owner, and target date are visible.
Official sources and next step
This tracking method is an Aplon proposal. Your contract and applicable rules control. Sources were checked September 10, 2026:
- Office québécois de la langue française: retenue de garantie
- Quebec prompt-payment regulation, sections 20 to 31
- Official Secrétariat du Conseil du trésor guide to the regulation
- Public Services and Procurement Canada: form 1792 request for progress payment
- Canada Revenue Agency: GST/HST and construction holdbacks
Start with one active holdback. Copy the tracker header, reconcile its balance, and connect the next release condition to evidence and an owner. You can then apply the same method to other projects without mixing applications, decisions, and cash receipts.
A workbook for your next payment application
Track progress, holdback, GST, and QST in one Excel file.
Keep every holdback connected to its evidence.
See how Aplon connects progress, holdback, the customer decision, and cash collection without losing history.
A person still approves every external commitment.See how Aplon controls the cycleMathis is building Aplon with trade contractors to make every payment application clearer, verifiable, and easier to track.