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Tax Protection Agreement

Tax Protection Agreement Template for Australia

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Key Requirements PROMPT example:

Tax Protection Agreement

"I need a Tax Protection Agreement for a mining company acquisition in Western Australia, where the seller will provide tax protection to the buyer for any pre-completion tax liabilities arising before March 2025, with specific focus on resource rent tax exposures."

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Document background
The Tax Protection Agreement serves as a risk management tool in Australian business transactions and arrangements where parties seek to allocate tax-related risks and responsibilities. This document is commonly used in corporate acquisitions, restructurings, or joint ventures where uncertainty exists about potential tax liabilities or treatments. It provides a framework for protecting one party against specific tax exposures, outlining the mechanics for claims, payments, and dispute resolution. The agreement must comply with Australian taxation laws and regulations, including the Income Tax Assessment Acts and related legislation. Typically implemented alongside major transactions or business arrangements, the Tax Protection Agreement details the scope of protected tax matters, notification requirements, and the process for handling tax authority investigations or assessments.
Suggested Sections

1. Parties: Identifies and defines the parties to the agreement - typically the protected party and the protecting party

2. Background: Sets out the context and purpose of the tax protection agreement, including relevant business relationships

3. Definitions: Defines key terms used throughout the agreement, including specific tax-related terminology

4. Scope of Protection: Defines the specific tax matters, periods, and jurisdictions covered by the protection

5. Protection Mechanism: Details how the tax protection will operate, including payment mechanisms and timing

6. Conditions Precedent: Specifies any conditions that must be met before the protection becomes effective

7. Representations and Warranties: Statements of fact and assurances from both parties regarding their capacity and tax affairs

8. Notification Requirements: Procedures for notifying tax issues, assessments, or claims

9. Claims Process: Step-by-step process for making and handling claims under the agreement

10. Dispute Resolution: Procedures for resolving disputes between the parties regarding the agreement

11. Term and Termination: Duration of the agreement and circumstances under which it can be terminated

12. Confidentiality: Obligations regarding the confidentiality of tax information and the agreement terms

13. General Provisions: Standard legal provisions including governing law, notices, and amendments

Optional Sections

1. International Tax Provisions: Additional provisions for cross-border tax issues when international elements are involved

2. Specific Transaction Protection: Detailed provisions for specific transactions requiring special tax protection

3. Insurance Requirements: Requirements for maintaining tax liability insurance when required by the circumstances

4. Third Party Rights: Provisions regarding the rights of third parties when they may be affected by the agreement

5. Tax Authority Cooperation: Procedures for cooperating with tax authorities when direct interaction is anticipated

6. Step-In Rights: Rights of the protecting party to take control of tax matters in certain circumstances

7. Tax Benefit Sharing: Provisions for sharing any tax benefits that may arise from protected matters

Suggested Schedules

1. Schedule 1 - Protected Tax Matters: Detailed list of specific tax matters, transactions, or arrangements covered by the protection

2. Schedule 2 - Calculation Methodology: Detailed methodology for calculating protected amounts and payment obligations

3. Schedule 3 - Claim Forms and Procedures: Standard forms and detailed procedures for making claims

4. Schedule 4 - Contact Details: Details of key contacts and advisers for both parties

5. Schedule 5 - Excluded Matters: Specific exclusions from the protection scope

6. Appendix A - Supporting Documents: List of key supporting documents relevant to the protected tax matters

7. Appendix B - Tax Opinions: Copies or summaries of relevant tax opinions or advice

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

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant legal definitions
Agreement
Assessment
ATO
Business Day
Claim
Claim Notice
Completion Date
Confidential Information
Dispute
Dispute Notice
Effective Date
Excluded Tax Matter
GST
Indemnified Party
Indemnifying Party
Loss
Material Adverse Effect
Notice
Payment Date
Protected Matter
Protected Period
Protected Tax
Protection Amount
Protection Payment
Reference Date
Related Entity
Relevant Tax Authority
Representatives
Tax
Tax Benefit
Tax Claim
Tax Law
Tax Liability
Tax Loss
Tax Matter
Tax Period
Tax Protection Amount
Tax Return
Tax Saving
Taxable Income
Transaction
Transaction Documents
Warranty
Clauses
Interpretation
Definitions
Tax Protection Scope
Protection Mechanism
Payment Obligations
Claims Process
Notification Requirements
Tax Authority Dealings
Information Rights
Conduct of Tax Matters
Representations and Warranties
Conditions Precedent
Indemnification
Limitation of Liability
Dispute Resolution
Confidentiality
Force Majeure
Assignment
Notices
Amendments
Severability
Entire Agreement
Governing Law
Third Party Rights
Costs and Expenses
Term and Termination
Survival
Further Assurance
Counterparts
Time of Essence
Relevant Industries

Financial Services

Mining and Resources

Real Estate and Property

Manufacturing

Technology

Professional Services

Energy and Utilities

Infrastructure

Healthcare

Retail and Consumer Goods

Relevant Teams

Finance

Legal

Tax

Risk Management

Compliance

Treasury

Corporate Development

Mergers & Acquisitions

Financial Planning & Analysis

Internal Audit

Relevant Roles

Chief Financial Officer

Tax Director

Finance Director

Corporate Lawyer

Tax Manager

Financial Controller

Risk Manager

Compliance Officer

Treasury Manager

Corporate Development Director

M&A Director

Transaction Services Manager

Industries
Income Tax Assessment Act 1936: Fundamental legislation establishing the basis for income tax in Australia, including various tax protection mechanisms and anti-avoidance provisions
Income Tax Assessment Act 1997: Modern rewrite of tax legislation that works in conjunction with the 1936 Act, containing detailed provisions about assessable income, deductions, and tax treatments
Taxation Administration Act 1953: Governs the administration of federal taxation laws, including procedures for assessments, objections, and appeals
Contract Law Act 1963: Provides the legal framework for contract formation and enforcement in Australia, ensuring the tax protection agreement is legally binding
Australian Consumer Law (Schedule 2 of the Competition and Consumer Act 2010): Relevant for consumer protection provisions that might affect tax protection agreements, particularly regarding unfair contract terms
Tax Agent Services Act 2009: Regulates tax agent services and might be relevant if the agreement involves tax agent services or advice
International Tax Agreements Act 1953: May be relevant if the tax protection agreement involves international elements or cross-border transactions
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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