Proper Invoice Deficiency Notice

Proper Invoice Deficiency Notice

Fast-Fact Summary

• Governing agency: Ontario Ministry of the Attorney General / Construction Act framework
• Form, bylaw, or regulation: Construction Act prompt payment notice / O. Reg. 304/18
• Effective/current anchor: Ontario Construction Act amendments in force January 1, 2026 through Bill 216 and Bill 60
• Direct portal or source: https://www.ontario.ca/laws/statute/90c30

Mandatory Scope

This compliance requirement applies to all owners, general contractors, subcontractors, and trades operating under the jurisdiction of the Ontario *Construction Act*. It governs all construction contracts and subcontracts, regardless of project value, worker counts, licence categories, or equipment classes. Any payer wishing to dispute the structure or layout of an invoice must strictly adhere to this statutory process.

Deadlines & Administrative Windows

• 7-Day Invoicing Rule: Invoices are legally deemed proper unless the owner gives a formal written notice of deficiency within 7 days after receiving the invoice. Missing this 7-day notice window forfeits the right to dispute invoice form or structure and starts the 28-day prompt-payment timeline.
• Mandatory Annual Holdback: For contracts extending beyond one year, owners must publish a Notice of Annual Release of Holdback (Form 6) on an electronic construction trade news website within 14 days after each contract anniversary.
• Holdback Payment Window: Payment of the accrued basic holdback must occur no earlier than day 60 and no later than day 74 after the publication of Form 6, provided no liens are preserved.
• Adjudication Extension: Parties have a strict 90-day window after contract completion, abandonment, or termination to initiate interim binding adjudication through ODACC or a qualified private adjudicator.

Financial & Legal Liability

• Non-Compliance Penalty: Missing the 7-day notice window results in the invoice being deemed proper. The payer forfeits the right to dispute invoice layout or structure and triggers the mandatory 28-day prompt-payment timeline.
• Repeal of Section 27.1: The former section 27.1 notice-of-non-payment mechanism for refusing holdback distribution due to deficient or incomplete work is repealed. Holdback use is strictly restricted to formal contract abandonment or termination scenarios and preserved lien risk.
• Average WSIB Premium Rate: $1.23 per $100 of insurable payroll, down from $1.25 per $100 of insurable payroll.
• G6 Non-Residential Construction Rate: $1.61 per $100 of insurable payroll.
• 2026 Maximum Insurable Earnings Ceiling: $121,700.

Step-by-Step Filing Instructions

• Step 1: Record Invoice Receipt: Log the exact calendar date and time the invoice is received from the contractor to establish the statutory 7-day deficiency notice window.
• Step 2: Conduct Structural Review: Immediately review the invoice against the "proper invoice" requirements set out in the contract and Section 22 of the *Construction Act*.
• Step 3: Draft Written Notice: If the invoice fails to meet structural requirements, draft a formal written notice of deficiency detailing the specific layout or structural omissions. Do not use this notice for disputing valuation or work quality.
• Step 4: Deliver Notice: Serve the formal written notice of deficiency to the contractor within 7 days of receipt.
• Step 5: Document Retention: Retain the notice, proof of delivery, and the original invoice in the project record for compliance auditing.
• Step 6: Publish Form 6 (If Applicable): For multi-year contracts, publish the Notice of Annual Release of Holdback (Form 6) on an electronic construction trade news website within 14 days after each contract anniversary.
• Step 7: Release Holdback: Pay the accrued basic holdback between day 60 and day 74 after publication, provided no liens are preserved.

2026 Inspection Notes

For 2026 construction compliance context, pay close attention to working-at-heights training records, trenching and excavation controls, and training/competency documentation. Ensure all administrative workflows align with the *Occupational Health and Safety Act* (OHSA) and O. Reg. 213/91 alongside payment compliance.

Official Sources

• https://www.ontario.ca/laws/statute/90c30
• https://www.ontario.ca/laws/regulation/180304