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A Tax Indemnification Agreement is a crucial legal document used in various business contexts where one party needs to protect another from potential tax liabilities and obligations. This agreement is particularly common in mergers and acquisitions, corporate restructurings, or complex business transactions in Canada where tax exposures need to be allocated between parties. The document typically accompanies primary transaction documents and outlines specific tax-related responsibilities, incorporating both federal Canadian tax laws and relevant provincial tax legislation. It includes detailed provisions for handling tax claims, audit responses, and dispute resolution procedures, while ensuring compliance with Canadian tax regulations. The agreement is essential when parties need to clearly define who bears the risk of pre-closing tax liabilities, unexpected tax assessments, or specific tax exposures identified during due diligence.

1. Parties: Identification of the indemnitor and indemnitee, including full legal names and addresses

2. Background: Context of the agreement, including the underlying transaction or relationship giving rise to the tax indemnification

3. Definitions: Detailed definitions of key terms including 'Tax', 'Tax Authority', 'Tax Claim', 'Indemnified Taxes', and other relevant terms

4. Scope of Indemnification: Detailed description of which taxes are covered and the extent of the indemnification obligation

5. Indemnification Procedures: Process for making indemnification claims, including notice requirements and timing

6. Payment Terms: Timing and method of indemnification payments, including provisions for direct payments to tax authorities if applicable

7. Tax Returns and Audits: Rights and obligations regarding the preparation and filing of tax returns, and handling of tax audits

8. Cooperation and Information Sharing: Obligations to cooperate and share relevant tax information between parties

9. Dispute Resolution: Procedures for resolving disputes related to tax indemnification claims

10. Confidentiality: Provisions regarding the confidentiality of tax information and related documents

11. Term and Termination: Duration of the indemnification obligations and any termination rights

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