Tax Indemnity Agreement Template for Australia

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Key Requirements PROMPT example:

Tax Indemnity Agreement

"I need a Tax Indemnity Agreement for an M&A transaction closing in March 2025, where our Australian tech company is acquiring a software development business, with specific focus on protecting against historical R&D tax credit claims and state payroll tax exposures."

Document background
A Tax Indemnity Agreement is a critical legal instrument used in Australian business transactions where one party seeks protection against potential tax liabilities. It is commonly employed in mergers and acquisitions, corporate restructurings, or business sales where historical or future tax exposures need to be allocated between parties. The agreement specifies which party will bear the economic burden of particular tax liabilities, outlines the process for handling tax audits or investigations, and establishes procedures for making indemnity claims. The document must comply with Australian taxation laws, including the Income Tax Assessment Acts, Taxation Administration Act, and relevant state legislation. It's particularly important in transactions where tax risks have been identified during due diligence or where complex tax arrangements exist.
Suggested Sections

1. Parties: Identifies and provides full details of the indemnitor and indemnitee

2. Background: Sets out the context and commercial purpose of the tax indemnity arrangement

3. Definitions and Interpretation: Defines key terms including relevant tax types, periods, and jurisdictions covered

4. Scope of Indemnity: Specifies which taxes are covered and the extent of the indemnification obligation

5. Indemnification Process: Details the procedure for making indemnity claims and timing requirements

6. Payment Terms: Specifies when and how indemnity payments must be made

7. Tax Treatment of Payments: Addresses the tax treatment of indemnity payments themselves

8. Notice Requirements: Sets out requirements for notification of tax claims or assessments

9. Cooperation and Information Sharing: Obligations regarding sharing of tax-related information and documentation

10. Dispute Resolution: Procedures for resolving disputes about indemnity obligations

11. Term and Termination: Duration of the indemnity and circumstances for termination

12. General Provisions: Standard boilerplate clauses including governing law, notices, and amendments

13. Execution: Formal execution blocks for all parties

Optional Sections

1. Tax Audits and Investigations: Procedures for handling tax audits - include when there's significant audit risk

2. Cross-Border Provisions: Special provisions for international tax implications - include for multinational parties

3. Tax Insurance: Requirements for tax insurance - include when specific tax insurance is required

4. Historical Tax Matters: Specific provisions for known historical tax issues - include for pre-existing tax risks

5. Third Party Claims: Procedures for handling third party tax claims - include when third party tax exposure exists

6. Tax Gross-Up: Provisions for grossing up payments - include when payments might be subject to withholding

7. Specific Transaction Provisions: Provisions for specific transaction-related tax matters - include for complex transactions

Suggested Schedules

1. Schedule 1 - Covered Taxes: Detailed list of specific taxes covered by the indemnity

2. Schedule 2 - Excluded Tax Matters: List of specific tax matters excluded from the scope of indemnity

3. Schedule 3 - Claim Procedures: Detailed procedures and timeframes for making and processing claims

4. Schedule 4 - Pre-Existing Tax Matters: List of known tax issues and their treatment under the agreement

5. Schedule 5 - Required Documentation: List of documents required for making and supporting claims

6. Appendix A - Tax Warranties: Specific tax-related warranties given by the indemnitor

7. Appendix B - Form of Notice: Template forms for various notices required under the agreement

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions
Clauses
Relevant Industries

Financial Services

Mining and Resources

Real Estate

Manufacturing

Technology

Healthcare

Retail

Energy

Infrastructure

Professional Services

Agriculture

Transportation and Logistics

Telecommunications

Education

Construction

Relevant Teams

Legal

Tax

Finance

Treasury

Compliance

Risk Management

Corporate Development

Mergers & Acquisitions

Executive Leadership

Company Secretariat

Internal Audit

Relevant Roles

Chief Financial Officer

Tax Director

Head of Legal

Corporate Counsel

Tax Manager

Financial Controller

Compliance Officer

Risk Manager

Treasury Manager

Company Secretary

Managing Director

Chief Executive Officer

Tax Partner

M&A Director

Finance Director

Industries
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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