Hold back part of an invoice

On a renovation job the customer often keeps back a percentage until the deficiency period ends. You invoice $10,000, they hold 10%, and you can collect $9,000 today. You are still owed the other $1,000.

Recording that as a holdback keeps three things true at once: the income is counted in the month you did the work, the $1,000 still shows on your books as money owed to you, and your receivables list stops chasing you about a payment your own contract says is not due yet.

1. Open the invoice.
2. Choose Hold back.
3. Enter the percentage the customer is keeping, or the exact amount.
4. Send the invoice as normal.

The invoice your customer receives shows the full amount of the work, the holdback taken off, and Payable now, so they can see what to pay without having to work it out or ask. The total stays the full amount, because that is what you are owed: only the collectible part of it has changed.

The invoice screen shows the same three figures back to you, and keeps showing what is still held until you release it all.

The percentage is of the work, not of the total

A 10% holdback on $10,000 of work plus $500 GST holds back $1,000, not $1,050. That is what the lien legislation means by a percentage of the value of the work, and it is what the tax rules mean by part of the consideration.

Releasing it

When the deficiency period has passed and the customer accepts the work, open the invoice and choose Release holdback. That moves the money back into your ordinary receivables so it shows up as payable and can be matched to the payment when it arrives.

You can release part of it. Half at substantial completion and half at final is common, and TALISK_HQ keeps count of what is left.

TALISK_HQ will never release a holdback for you on a date. A deficiency period ending is a fact about the calendar; the holdback becoming payable is your judgement about whether the work was accepted. On top of that, releasing can change what you owe on a sales tax return, and nothing should do that because a clock ticked.

What you are owed in holdbacks altogether

Across every job, the total sitting in holdbacks is the Holdback Receivable line on your balance sheet, under Ledger then Reports. That figure is built from your ledger rather than from a list of invoices, so it is the one that ties out.

To see which jobs make it up, open that account's detail from the balance sheet. Every line is one holdback withheld or released, and each one opens the invoice it came from.

GST on a holdback

By default TALISK_HQ charges the tax on the whole invoice straight away, which is the ordinary rule and always safe.

There is a narrower rule that can defer it. If the holdback is required by law or by a written contract, and the work is construction, renovation, alteration or repair of real property or a vessel, then the tax on the held-back part is not payable until the holdback is paid out or becomes payable. If that describes your contract, tick Defer the tax under the holdback rule when you set the holdback, and TALISK_HQ will keep that tax off your return until you release it.

Leave it off if you are not sure. Charging the tax in the normal way is never wrong: it reaches the CRA a little earlier than it strictly had to. Deferring it when the rule does not apply means your return is short, and that is the error worth avoiding. If your work is not on buildings or vessels, or there is no written contract, the rule does not apply to you.

What it does not cover

Money you hold back from a subcontractor is not tracked here. Record that as an ordinary bill for what you owe them now, and a second bill when you release the rest.