Generally, HST will apply to progress payments on contracts to construct, renovate, alter or repair real property if the property is delivered or the service performed on or after July 1, 2010.

Progress Payments and Holdbacks (relating to progress payments)

If a progress payment is made or due before July 1, 2010 and after October 14, 2009 the portion of the amount which relates to services performed after June 30^th will be subject to HST.  The HST on this amount is to be included on the HST return of the contractor for the period that included July 1^st (for quarterly filers on a calendar year, the 3^rd quarter).  The recipient of the supply will be able to claim input tax credits on the amounts for their reporting period that includes July 1, 2010.

Holdbacks (relating to progress payments)

Generally HST will apply to the same portion of the holdback as the progress payment to which it relates (i.e. for property delivered or services which have been performed after July 1, 2010).  The HST is payable on the holdback when the payment is actually made or the day on which the holdback expires (which ever comes first).  The Ontario portion (8%) will not apply to holdback payments which relate to progress payments for property delivered or services performed before July 1, 2010 even if the holdback is paid after June 30, 2010