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Profit Split Agreement Template for Australia

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Key Requirements PROMPT example:

Profit Split Agreement

"I need a Profit Split Agreement for a joint venture between my tech company and a software development firm in Sydney, with a 60-40 profit split ratio, quarterly distributions starting from March 2025, and specific provisions for intellectual property ownership."

Document background
A Profit Split Agreement is essential for business arrangements where multiple parties collaborate and share in the profits of a venture. This document is particularly relevant in the Australian business context, where it must comply with federal and state legislation, including the Corporations Act 2001 (Cth), various Partnership Acts, and tax laws. The agreement is commonly used in joint ventures, business collaborations, investment partnerships, and other commercial arrangements where profit sharing is a key component. It should clearly define profit calculation methods, distribution mechanisms, accounting requirements, and parties' rights and obligations. The document typically includes provisions for regular financial reporting, audit rights, dispute resolution, and tax treatment, making it crucial for establishing clear and enforceable profit-sharing arrangements in Australia.
Suggested Sections

1. Parties: Identifies and provides full details of all parties to the agreement

2. Background: Explains the context and purpose of the agreement, including the business relationship between the parties

3. Definitions and Interpretation: Defines key terms used throughout the agreement and sets out interpretation rules

4. Term and Commencement: Specifies when the agreement starts and its duration

5. Profit Definition: Clearly defines what constitutes profit for the purposes of the agreement

6. Calculation of Profit: Details the methodology for calculating distributable profit

7. Profit Split Ratio: Specifies the agreed split of profits between parties

8. Payment Terms: Sets out timing and method of profit distribution

9. Accounting and Records: Specifies accounting standards, record-keeping requirements, and audit rights

10. Parties' Obligations: Details the responsibilities and obligations of each party

11. Confidentiality: Protects confidential information shared between parties

12. Dispute Resolution: Establishes procedures for resolving disagreements

13. Termination: Specifies circumstances and procedures for ending the agreement

14. General Provisions: Includes standard boilerplate clauses like notices, governing law, and assignment

Optional Sections

1. Non-Competition: Restricts parties from competing activities - include when parties may have competing interests

2. Intellectual Property: Addresses IP ownership and usage - include when IP is relevant to the profit-generating activities

3. Force Majeure: Covers unforeseeable circumstances - include when long-term or high-value arrangement

4. Tax Arrangements: Detailed tax handling procedures - include when complex tax implications exist

5. Working Capital: Defines working capital requirements - include when ongoing business operations need funding

6. Management Rights: Specifies management and control rights - include when parties have operational involvement

7. Exit Mechanisms: Details procedures for party exit - include when long-term or complex arrangement

Suggested Schedules

1. Calculation Methodology: Detailed formulas and examples of profit calculations

2. Accounting Principles: Specific accounting standards and procedures to be followed

3. Excluded Costs: List of costs specifically excluded from profit calculations

4. Distribution Timeline: Detailed schedule of profit distribution dates and procedures

5. Reporting Template: Standard format for regular profit reporting

6. Initial Capital Contributions: Details of any initial investments or contributions by parties

7. Authorized Representatives: List of authorized persons for various decisions and their powers

Authors

Alex Denne

Head of Growth (Open Source Law) @ ¶¶Òõ¶ÌÊÓƵ | 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

Technology

Professional Services

Real Estate

Mining and Resources

Manufacturing

Retail

Entertainment

Healthcare

Financial Services

Construction

Agriculture

Media and Communications

Relevant Teams

Legal

Finance

Accounting

Tax

Corporate Development

Business Development

Operations

Commercial

Compliance

Risk Management

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Finance Director

Commercial Director

Business Development Manager

Partnership Manager

Legal Counsel

Corporate Lawyer

Tax Manager

Accounting Manager

Operations Director

Investment Manager

Joint Venture Manager

Managing Partner

Project 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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