GST/HST, PST and holdback on construction invoices in Canada

By Randall Strickland · Updated 22 October 2026 · 3 min read

In Canada, the tax on your invoice depends on where the work is, not where your office is. Add a 10% holdback on most construction contracts and year-end reporting for subcontractor payments, and a simple progress bill has a lot riding on it. Here’s the short version for contractors.

Sales tax by province or territory

GST/HST registrants charge the rate for the province where the work is done. Five provinces use a single harmonized sales tax (HST); everywhere else charges 5% GST, and some provinces have their own sales tax on top.

Put your GST/HST number on every invoice, and show each tax separately.

When PST applies to construction

In British Columbia and Manitoba, a contractor improving real property usually pays PST or RST on the materials they buy and doesn’t charge it to the customer on the contract. Saskatchewan is different: PST also applies to contracts for commercial real property, so many commercial contractors there do charge it. These rules have exceptions, so check with the provincial finance ministry or your accountant for your type of work.

The 10% holdback

Provincial construction and lien laws require the owner, and each contractor down the chain, to hold back 10% of the value of work done, to protect lien rights. The holdback is released after the lien period ends, once no liens are registered. Track what’s been held on each job; it’s money you’ve earned and need to remember to invoice for.

Several provinces now have prompt payment rules too. In Ontario, for example, an owner must pay a proper invoice within 28 days, and a contractor must pay its subcontractors within 7 days of being paid. Alberta has similar rules.

T5018: reporting payments to subcontractors

If construction is your main business activity, you report payments you made to subcontractors for construction services on T5018 slips (or a list) with a T5018 Summary, within six months after the end of your reporting period. You can report by calendar year or by fiscal period, and payments under $500 to a subcontractor in the period don’t need to be reported. Each slip needs the subcontractor’s name, address and business number or social insurance number.

How JobFigure handles it

Set your country to Canada and JobFigure works in Canadian dollars with “holdback” in place of retainage. In Company Profile you pick your usual province and add your GST/HST number; each invoice lets you choose the province of the work, and PST or RST is a tick box where it can apply. The invoice prints each tax separately, the holdback and the amount due. At year end, Send Data Out → Payments to subcontractors totals what you paid each subcontractor, with their business number and address, for your T5018.

This is a plain-English summary, not tax or legal advice. The Canada Revenue Agency, your provincial finance ministry and your province’s construction or lien legislation have the full rules; check anything unusual with your accountant.

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