Retention is a slice of every payment claim that your head contractor keeps rather than pays. It is security: if you walk off, or something you built turns out to be defective, they are holding some of your money to put it right with.
Your contract may call it retentions, retention money or cash retention. Same thing. A few contracts let you put up a retention bond or a bank guarantee instead of having cash withheld: that is security of a different kind, and it is outside what this platform tracks; everything below is about cash retention.
You get it back. Not on a date in the calendar, but on the events your contract names, typically half when the work is finished, and the rest once the defects period has run.
The short answer to the two questions people actually have:
- How much is held? Usually a percentage of each claim (10% is the common figure) until the total held reaches a cap, usually 5% of your contract value. After the cap, nothing further is withheld. Some contracts instead use a sliding scale, where the rate steps down as the job gets bigger.
- When do I get it back? The first half typically at practical completion; the balance at the end of the defects liability period. Both are set by your contract, and both require you to claim them, because retention is never released automatically.
The rest of this page is the detail behind those two answers.
How much is withheld
Most contracts set two numbers.
The initial rate is the percentage taken off each claim. 10% is the common figure.
The cap is the ceiling on the total ever held. It is expressed either as a percentage of contract value (5% is common) or as a fixed dollar amount, where the parties negotiated a hard cash limit regardless of how the contract grows.
Retention accrues at the initial rate on every claim until the running total reaches the cap, then stops. The claim that would cross the cap has its retention trimmed to land exactly on it.
Worked through: a $1,000,000 contract at 10% with a 5% cap holds back $50,000 in total. Your first $100,000 claim gives up $10,000. So do the next four. The sixth claim has no retention withheld at all, because the $50,000 cap is already full.
The sliding scale
A third arrangement drops the single rate altogether. A sliding scale sets a schedule: 10% of the first $200,000 of work, 5% of the next $800,000, nothing above $1,000,000, and each rate applies only to the part of the job that falls inside its own band. Tax brackets work the same way, and the resemblance is worth holding on to: moving into a lower band does not re-price the work below it.
The consequence people find surprising is that the rate is not a property of the claim, it is a property of where the job has got to. On the schedule above, if you have claimed $150,000 so far, your next $150,000 claim is not charged at one rate: the $50,000 that finishes the first band gives up 10%, and the $100,000 after it gives up 5%. That claim loses $10,000, where a flat 10% contract would have taken $15,000 from the identical claim.
The schedule usually caps itself. A last band of 0% ("nothing above $1,000,000") means the total held stops growing there, which on the example above is $60,000. Where a contract states a separate hard cap on top of the schedule, that applies too, and whichever bites first is the ceiling.
Sliding scales are common in the New Zealand standard forms and appear in negotiated Australian subcontracts, usually on larger jobs where a flat percentage would hold an uncomfortable amount of cash by the end.
Variations are usually retained with everything else. Most subcontracts state one retention rule over the contract sum, and approved variations adjust the contract sum, so the rate applies to variation work exactly as it does to base scope, and there is one cap measured against the whole contract value. That is how a contract is set up here unless you say otherwise.
A variation that has not been approved yet is retained too. A head contractor withholds retention on everything it certifies, whether or not the variation has been formally approved, so work claimed against a pending variation has retention withheld at the same rate as everything else, and its value raises the cap the same way an approved variation's would. What a pending variation does not change is the retention release point: that is measured against the value of the contract and its approved variations only, so work nobody has agreed yet cannot push your release further away. If a pending variation is later rejected, its value comes off the cap from then on; retention already withheld against it stays held, and if that leaves more held than the smaller cap allows, no further retention is withheld against that cap until it is back within it. Where variations carry their own retention, that is the variation cap alone, and work on the base contract keeps being retained as before.
Two less common arrangements are set up differently. A contract that says no retention is deducted from variations withholds nothing on variation work, and its cap is measured against the base contract value alone. A contract that states a different rate for variations carries two retention configurations, one for base items and one for variations, and a claim spanning both computes them separately, each against its own cap.
Scope taken off the contract lowers the cap. A cap set as a percentage, or worked out from a sliding scale, is measured against the contract value as it currently stands. Record a deduction (a variation that omits work rather than adding it) and the value it comes off falls, so the ceiling on retention falls with it. On a $1,000,000 contract with a 5% cap, omitting $100,000 of scope takes the ceiling from $50,000 to $45,000.
Two details are worth knowing, because neither is what people expect:
- Which of the two caps moves, where variations carry a cap of their own, is decided by the work the reduction comes off, not by the variation carrying it. Omitting part of your base scope reduces the base figure, even though the omission is recorded as a variation. Omitting part of an approved variation reduces the variation figure.
- A deduction counts as soon as it is recorded, before anyone approves it, the same as additional work, which also counts toward the cap from the moment it is recorded. You should not be told you may claim work that has already been taken off you.
Recording one gives nothing back that is already held. If the new ceiling is below the retention already withheld, no further retention comes off your claims; the balance still comes back through a release, in the ordinary way.
Retention comes off before GST
A line claimed at $10,000 with $500 retention is invoiced as $9,500 plus GST, not $10,000 plus GST less $500.
That is the standard progress-claim layout in both countries, and in New Zealand it is the statutory position. The consequence is that GST on the retained portion is deferred, not lost: the retention release line, when you eventually claim it, carries no retention of its own and is taxed on its full value. Across the claim that withheld it and the claim that releases it, you account for GST on the whole supply.
Retention withheld from a line inherits that line's tax treatment. Retention taken from a GST-free line never attracts GST, and there is no separate setting for it.
Getting it back
Releasing retention is something you do, not something that happens to you. The platform will not quietly reverse a withholding, and neither will your head contractor.
You release it by adding a retention release line to a claim, either bundled into an ordinary monthly claim, or as a standalone release claim. The line's value is the amount you are releasing; it carries no retention of its own.
Two conditions gate the first release.
The release trigger has to have been met. This is a percentage of your contract value that must have been claimed and accepted before any retention can come back. It is commonly 100%, the practical equivalent of "the work is finished and certified". The figure it is measured against is the contract value as it currently stands, so a deduction moves this too: omit scope you were never going to claim and the trigger arrives sooner, because there is less left to claim.
The first release is capped at a proportion of what is held. Your contract sets this, commonly 50%, which is the "half at practical completion" tranche. You cannot take the whole balance in the first release.
The remainder, the defects tranche, becomes claimable after that. Most contracts permit it only once the defects liability period has expired, and the platform warns you if you try to release it early. It warns rather than refuses, because contracts vary and yours may genuinely allow it.
The platform shows all four figures on the contract at all times: withheld to date, released to date, net still held, and available to release now.
When you can serve the release claim
A retention release is still a payment claim, and it is still subject to the service window. This catches people, because the defects period can run for a year past practical completion, well past the point where the ordinary claim window has closed.
Three jurisdictions give the release claim a longer window of its own:
- Western Australia: a claim for the final payment runs to the later of 28 days after the defects liability period ends and 6 months after all the work was completed (s 23(5)(b) to (d)).
- Queensland: a claim for the final payment may be given up to 28 days after the last defects liability period ends (s 75(3)(b)).
- Victoria: releasing retention is a different instrument, a performance security claim. It may be served from whichever comes first of 20 business days after the defects liability period ends and the day your contract nominates, and closes on the last day of the month following the month that period ends (ss 17B(1), 17C(b)).
Everywhere else (NSW, ACT, SA, Tasmania) the act draws no distinction between a release and any other progress claim, so the ordinary longstop applies to your retention release too. In South Australia that is 6 months after the work was last carried out (s 13(4)(b)). A defects period running longer than that means your release relies on the claiming period your contract sets, rather than on the Act.
New Zealand imposes no longstop at all, so the timing question does not arise there.
If this applies to you, the fix is not to wait and hope. Check what your contract says about the claiming period, and record it on the contract in the platform, and the platform will then extend the window it checks against, rather than flagging a legitimate release as out of time.
New Zealand holds retention differently. Since the Construction Contracts (Retention Money) Amendment Act 2023, retention money on New Zealand contracts is held on trust for you and must be kept separately, with reporting obligations on the party holding it. That governs how your retention is held, not when you can claim it back.
One thing to watch in NSW, SA, the ACT and Tasmania
These jurisdictions allow only one payment claim per named month. A standalone retention release, served in a month that already carries a claim on that contract, is a second claim in that month, and may be invalid.
The clean route is to bundle the release into that month's ordinary claim. The platform warns you when a standalone release would collide, and requires you to acknowledge it explicitly before proceeding.
When the numbers do not match
Subcontractors routinely discover, years in, that their retention figure and the head contractor's disagree.
The usual cause is a payment schedule that certified a different retention figure from the one claimed, which was recorded and then never reconciled. The platform tracks claimed and accepted retention as separate figures for exactly this reason, and surfaces the variance on every claim where they differ. It is worth looking at that number every month rather than at the end.