so you get a payable invoice from a sub contractor, with GST

and you are holding back 10% until the work is down to your satisfaction - correct ?

and you are using projects to track job sites ?

holding back 10% until satisfied = yes.

Yes I track job costs.

This is the Invoice I have     Invoice Amount $ 140,376.64

                                            Plus 5% GST    $     7,018.83

                                            Total Invoice     $  147,395.47

                                            Less 10% HB    $   14,739.55

                                            Total Payable    $ 132,655.92

Your invoice is a typical progress invoice - you may want to set up an excel spreadsheet to record the full project amount and then deduct the invoices from this which should have a formula in it to track the running balance outstanding. You can also add Change Orders as they occur and this spreadsheet becomes your verification process to ensure everything has been billed properly.

Thank you for that information smithco, I will keep that in mind for future Progress Invoices. This Invoice is 100%, and the only one I will receive. I still need to track it in the Income & Expense report as a Holdback, as it is still a payable.

If I enter the Invoice as it appears, I will pay $132,655.92 and lose track of my Holdback amount. I thought of adding a Holdback Account, enter the amount of HB & GST(allocating it to the job site), and deducting it from the Invoice. Any comments or suggestions on that?

you could create a liability account
   2480  Holdback Payable

create a purchase invoice with 2 lines, net 132,655.92, both allocated to a project
  1)  140,376.64 with GST code to the appropriate expense
  2)  -14,739.55 to holdback payable 

dr GST/HST Paid on Purchases                                        7,018.83            -
db Subcontractor Purchases                                        140,376.64            -
cr Accounts Payable                                                        -   132,655.92
cr Holdback Payable                                                        -    14,739.55

the detailed project allocation report, selecting the project and the holdback payable account will 
identify what is held back

at a later time, a second purchase invoice of 14,739.55 to holdback payable will allow you to pay the holdback
dr Holdback Payable                                                14,739.55            -
cr Accounts Payable                                                        -    14,739.55

the detailed project allocation report now shows nothing owing

you could create a liability account
   2480  Holdback Payable

create a purchase invoice with 2 lines, net 132,655.92, both allocated to a project
  1)  140,376.64 with GST code to the appropriate expense
  2)  -14,739.55 to holdback payable 

dr GST/HST Paid on Purchases                                        7,018.83            -
db Subcontractor Purchases                                        140,376.64            -
cr Accounts Payable                                                        -   132,655.92
cr Holdback Payable                                                        -    14,739.55

the detailed project allocation report, selecting the project and the holdback payable account will 
identify what is held back

at a later time, a second purchase invoice of 14,739.55 to holdback payable will allow you to pay the holdback
dr Holdback Payable                                                14,739.55            -
cr Accounts Payable                                                        -    14,739.55

the detailed project allocation report now shows nothing owing

If that is the only invoice you will receive then you would post/allocate the full amount to expenses/project. The contractor is saying that he has completed his 100% portion of the job and will not be issuing a second invoice for the holdback. The 10% holdback is applicable to all subcontractors on that jobsite whether they worked for you or for someone else. Then only pay 90% of the invoice. That way the 10% will show on your Acct Pay aged listing as outstanding to pay. The holdback is not applicable to GST as that has already been entered on the full amount of the contract portion of the invoice. The holdback is not considered an expense or an income - it is a liability therefore not subject to taxes. It must be paid within a certain nbr of days after date of substantial completion.