How is retention calculated on a payment certificate?

The Total Retention is calculated as a percentage of the Total Work Value on the payment certificate, according to the following formula:

Total Retention = Total Work Value × Retention percentage from the contract

The retention percentage itself is taken from the “Retention” field defined on the underlying contract (not on the payment certificate itself), and the percentage is displayed explicitly in the field’s name, for example: “Total Retention (5%).”

Example

If the Total Work Value on the payment certificate is $200,000, and the Retention percentage defined on the contract is 5%:

Total Retention = 200,000 × 5% = $10,000

The Subtotal Before Tax therefore becomes 200,000 − 10,000 = $190,000.

Note: this deducted amount (the retention percentage) is also used as the basis for calculating Tax 1 and Tax 2 for each work item individually (it’s deducted from each item’s value first, then the tax is calculated on the net), before the taxes are summed up at the payment certificate level.