Ontario Construction Chart of Accounts for Xero (Holdbacks + HST, Free)

A general Ontario chart falls over quickly on a construction company: progress billings arrive minus a statutory holdback, subcontractors bill with and without HST depending on their registration, and municipal permit fees sit outside the tax system entirely. This Xero chart bakes those patterns in, with the tax treatment carried per account in Xero’s own Canadian rate names.

What is different from a generic Ontario chart

• Holdbacks receivable (asset) and holdbacks payable (liability): the Construction Act’s retained percentages, tracked separately from ordinary receivables and payables so a job’s cash position reads true. Both default to the custom Out of Scope rate; the tax event for the held-back slice generally lands when the holdback is released.
• Subcontractor labour (cost of sales) defaults to ON - HST on Purchases and lists Out of Scope as its legitimate alternative for unregistered small suppliers. The account note is the checklist: confirm the sub’s GST/HST registration before crediting the 13%.
• Materials and equipment and tool rentals as separate direct-cost lines, both at 13% with full input tax credits, so labour, materials, and plant costs can be compared per job without dissection.
• Safety gear and PPE at 13% (claimable), and permits and inspection fees on Out of Scope, because municipal charges are not taxable supplies.

The generic backbone stays: meals for site crews still hit the 50% ITC limitation, insurance premiums are HST-exempt but usually carry Ontario’s 8% RST as a pure cost, and wages plus source deductions stay out of scope.

Before the import: two minutes of setup

Xero’s Canadian edition seeds only the provincial purchases and sales pairs. Create the three custom 0% rates this chart references (Zero Rated, Exempt, Out of Scope) under the Tax menu, Tax settings, then Tax rates. Custom rates apply to both sales and purchases, so three cover everything. Then import through Accounting, Chart of accounts, Import; Xero will match the Tax Code column to the rates that now exist.

Place of supply on jobs

Construction work is taxed where the work is performed. An Ontario contractor building in Ottawa charges 13% HST; the same firm doing a job across the river in Gatineau is in Quebec’s system for that supply, and materials delivered to an out-of-province site follow that province’s taxes too. Xero seeds every province’s rate pair, so coding those jobs is picking the right province’s rate, not building one. The chart’s alternatives column flags the accounts where this comes up most: revenue, materials, and travel.

Working with it

1. Add the three custom rates, then import into a demo org first if you want a dry run.
2. Rename accounts to match how you quote jobs (labour, materials, plant) but keep the tax defaults.
3. Give the readable CSV to whoever enters bills; the notes column is written for them.
4. At month end, reconcile the holdback accounts against contracts; releases are the moment tax and revenue timing move.

One structural suggestion for firms running several jobs at once: resist the urge to clone accounts per project. Xero’s tracking categories carry the job dimension cleanly, so one materials account plus a Job tracking category beats a chart with forty materials accounts, and the tax defaults in this file keep working unchanged. The chart stays small enough to brief a new site administrator in one sitting, which is worth more than any theoretical precision a sprawling account list promises.

Volume is the enemy on a construction ledger: supplier bills, fuel slips, and site purchases arrive daily. Hubdoc captures and files them. ExpenseFlow reads each bill, distinguishes registered subs from small suppliers, codes materials at 13% and holdback lines out of scope, and posts to Xero against these accounts. Dext enforces per-supplier consistency for the merchants your crews hit weekly.

The QuickBooks version of this chart, with the same holdback and subcontractor structure in QBO’s format, is at Ontario construction chart of accounts for QuickBooks. Rate names and validity live in the Ontario Xero tax rates reference.