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Intercompany Recharge Agreement Template for Australia

This document is an agreement governed by Australian law that establishes the framework for charging and allocating costs between related entities within a corporate group. It sets out the methodology for calculating charges, payment terms, and compliance requirements with Australian tax laws, including transfer pricing regulations and GST obligations. The agreement includes detailed provisions for service delivery, documentation requirements, audit rights, and dispute resolution mechanisms, ensuring compliance with both Australian corporate and tax legislation while maintaining appropriate corporate governance standards.

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What is a Intercompany Recharge Agreement?

The Intercompany Recharge Agreement is essential for Australian corporate groups needing to document and formalize arrangements for sharing costs and services between related entities. This document type is particularly important in the context of Australian transfer pricing requirements, GST regulations, and corporate governance obligations. It provides a comprehensive framework for calculating and documenting intercompany charges, ensuring compliance with relevant tax and corporate laws while maintaining transparency in related party transactions. The agreement is commonly used when one entity provides services, facilities, or resources to another entity within the same corporate group, requiring systematic cost allocation and recharge mechanisms.

What sections should be included in a Intercompany Recharge Agreement?

1. Parties: Identification of the service provider and recipient entities

2. Background: Context of the arrangement and relationship between the parties

3. Definitions: Key terms used throughout the agreement

4. Services: Description of services to be provided and recharged

5. Calculation of Charges: Methodology for calculating recharge amounts, including cost allocation principles

6. Payment Terms: Billing frequency, payment timing, currency, and payment methods

7. Tax Obligations: GST/VAT treatment, withholding tax requirements, and tax compliance obligations

8. Record Keeping: Requirements for maintaining documentation to support recharge calculations

9. Audit Rights: Rights to audit recharge calculations and supporting documentation

10. Confidentiality: Protection of confidential information exchanged under the agreement

11. Term and Termination: Duration of agreement and circumstances for termination

12. Governing Law: Specification of Australian law and jurisdiction

13. General Provisions: Standard boilerplate clauses including notices, amendments, and entire agreement

What sections are optional to include in a Intercompany Recharge Agreement?

1. International Considerations: Required for cross-border arrangements, covering transfer pricing compliance and international tax implications

2. Intellectual Property: Needed when services involve creation or use of intellectual property

3. Employee Secondment: Required when arrangement involves staff transfers or secondments

4. Regulatory Compliance: Specific compliance obligations for regulated industries

5. Service Levels: Include when specific performance standards need to be maintained

6. Dispute Resolution: Detailed dispute resolution procedures beyond standard jurisdiction clause

7. Insurance: Specific insurance requirements for high-risk services

8. Data Protection: Required when personal data is processed as part of services

What schedules should be included in a Intercompany Recharge Agreement?

1. Schedule 1 - Services Description: Detailed description of services to be provided and recharged

2. Schedule 2 - Charge Calculation Methodology: Detailed cost allocation methodologies and markup calculations

3. Schedule 3 - Key Personnel: List of key personnel involved in service delivery and their roles

4. Schedule 4 - Service Levels: Detailed service level requirements and measurement metrics

5. Schedule 5 - Approved Cost Categories: List of cost categories eligible for recharge

6. Appendix A - Pro-forma Invoice: Template for recharge invoices including required information

7. Appendix B - Transfer Pricing Documentation: Templates and requirements for transfer pricing compliance

8. Appendix C - Regulatory Compliance Checklist: Checklist of regulatory requirements and compliance steps

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok˰ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

Australia

Publisher

tiktok˰

Cost

Free to use

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