Tools · Procurement
Retention on this claim,
and the total you are holding.
Enter the claim, your contract's retention rate and, if it has one, your cap. The calculator returns what is withheld this time, what has accumulated against the contract, how much room is left under the cap, and how the held amount splits between practical completion and the end of the defects liability period. Your figures, not assumed ones.
01 / The calculator
Work it out
Two fields to start. The cap, the running total and the release split are optional, and each one adds a line to the result.
Retention position
Enter the claim value and your contract's retention rate. The cap, the running total and the release split are optional, and each one adds a line below.
02 / Reading the result
What the held amount actually is
Retention is money that has been earned and not yet paid. It is not a discount, a deposit or a fee. The work was done, the claim was valued, and a slice of it is held back as security that the job will be finished properly and that defects raised afterwards will be rectified. That framing decides how it should be treated on both sides of the chain.
If you are the one being retained, the held amount is a receivable with a long and event-driven due date, not a write-off. It belongs in your cash flow forecast, dated to the release events rather than to a payment term, and it is exactly the kind of balance that quietly funds someone else's working capital when nobody is watching it. If you are the one holding retention against a subcontractor, it is a liability you will have to pay, and treating it as available cash is how a business finds itself unable to release retention on three jobs in the same quarter.
The cap line is the one most worth reading. A retention clause almost always has a ceiling, and once the running total reaches it the withholding stops. Knowing where you sit against that ceiling tells you what the remaining claims on the job will actually pay, which is a cash flow fact rather than an accounting one. Why retention exists, how it interacts with payment terms and what a retention ledger should contain are covered in the retention and payment terms reference.
03 / The release
Two events, not two dates
Retention typically comes back in two instalments, and both are triggered by events rather than by the calendar. That distinction is what makes retention so easy to lose track of, because an event that has not been formally recorded is an event that never triggers anything.
- Practical completion. The point at which the works are complete except for minor defects and omissions, and the client can occupy and use them. A share of the held retention is released here, and the defects liability period starts running from this date. What actually constitutes practical completion, and why the date needs to be recorded rather than assumed, is covered in the practical completion and defects liability reference.
- The end of the defects liability period. The balance is released once the period has run and the defects notified within it have been rectified. The length of the period is a contract term, and the release is rarely automatic. Someone has to claim it, which is why the date belongs in a diary the day practical completion is recorded, not in someone's memory.
The split between the two is a contract term as well, which is why the calculator asks for it rather than assuming an even division. Enter the share your contract releases at practical completion and the balance falls out automatically.
04 / Common mistakes
Where retention goes wrong
- Applying the rate after the cap is full. Over-withholding on later claims is a breach of the clause and a fast way to lose a good trade. Check the cumulative figure against the cap before every deduction.
- Forgetting the release. The single largest cause of lost retention. The release is not automatic, the job is closed by the time it falls due, and nobody on the other side is going to remind you. Diarise both events per contract on the day they become knowable.
- Treating held retention as available cash. Retention you hold against subcontractors will be paid out, usually in a lumpy way as several jobs reach the same milestone. Modelling it in the cash flow keeps that from arriving as a surprise.
- Not updating the cap when variations are approved. The cap moves with the contract sum, so a run of approved variations can lift the ceiling and restart withholding on claims that had stopped attracting it.
- Keeping the record in the claim spreadsheet. Retention outlives the claim schedule, the job folder and often the staff member who ran it. It needs its own ledger per contract, with the amount, the cap, the events and the dates in one place.
05 / FAQ
Common questions.
The contract states a percentage, and that percentage is applied to the value of the claim before GST. A claim of $100,000 with a 5% retention clause has $5,000 withheld and $95,000 payable before GST. What complicates it is the cap. Most retention clauses also limit total retention to a percentage of the contract sum, so once the running total reaches that ceiling, withholding stops part way through whichever claim crosses it and every later claim is paid in full. The calculator above applies the cap to the running total for that reason, which is why the deduction it shows on a late claim is often smaller than the rate alone would give.
The ones in your contract, which is why this calculator asks rather than assuming. Retention rates and caps are negotiated terms, they differ between standard forms, between a subcontract and a head contract, and between a builder who has worked with a trade for a decade and one who has not. Some residential subcontracts hold no retention at all and rely on the defects liability provisions instead. Read the clause, enter the figures it states, and treat any percentage quoted as typical on the internet as a conversation starter rather than a default.
In most contracts, in two instalments tied to two events rather than to dates. A share is released at practical completion, when the works are complete enough for the client to occupy and use them, and the balance is released at the end of the defects liability period, once the defects notified during that period have been rectified. The split, the length of the defects liability period and the mechanism for claiming the release are all contract terms. The events themselves, and what practical completion actually requires, are covered in the practical completion and defects liability reference.
This calculator works entirely in GST-exclusive figures, which is the cleaner way to think about it: retention is a deduction from the value of work, not from the tax. How GST interacts with a retained amount, and when it is attributable, depends on the contract wording and your accounting setup, and it is a question worth putting to your accountant against current ATO guidance rather than settling from a calculator. The related question of when a retention release is invoiced is handled the same way, as a contract and accounting matter rather than an arithmetic one.
Yes, and running it in both directions is the point. A residential builder usually sits in the middle of the chain: a head contract or an owner may hold retention against your claims while you hold retention against your subcontractors. The arithmetic is identical, only the direction of the cash changes. Running it both ways on the same job shows you the position that actually matters, which is whether the retention you are holding covers the retention being held on you, or whether you are funding both ends out of working capital.
Because the cap has been reached. A clause that holds 5% of each claim up to 5% of the contract sum stops withholding once the running total hits that ceiling, which on a typical claim schedule happens well before the final claim. The claim that crosses the line has a partial deduction, and every claim after it has none. If your deductions have gone to zero and you were not expecting it, check the cumulative figure against the cap rather than assuming an error. If they have not gone to zero and the cap should have been reached, someone is over-withholding.
The cap moves, because the cap is usually expressed as a percentage of the contract sum and the contract sum includes approved variations. That means a run of approved variations lifts the ceiling and withholding can resume on claims that had stopped attracting it. Enter the contract sum including approved variations in the calculator for that reason. Whether the retention rate itself applies to variation amounts is a contract question, and it is worth checking, because a contract that is silent on it tends to produce an argument at the release.
Retention is the most reliably forgotten money in a building business. It is small per claim, it accumulates for a year or more, it is not chased by anyone else, and by the time the release falls due the job is closed, the paperwork has moved and the person who ran it may have gone. Builders write off retention they were entitled to simply because nobody diarised the release. The discipline is a retention ledger per contract, with the amount held, the cap, the release events and the dates in one place, which is what the retention and payment terms reference sets out.
06 / Keep reading
The references behind this calculator
The knowledge nodes that explain retention properly, the companion calculators, and the parts of the platform that keep the ledger for you.
Retention that remembers itself.
VIABUILD holds the retention terms on the contract, applies them to every claim, keeps the running total against the cap and carries the release events into the forecast, so the money comes back because the system asked for it rather than because someone remembered.