Australian Art Resale Artists Royalty Scheme

Australian Art Resale Artists Royalty Scheme

The Artists’ Resale Royalty Scheme will provide artists with a 5% royalty on certain commercial resales of $1,000 or more that occur after 8 June 2010. The royalty will apply to existing as well as new works, but will not apply to the first change of ownership after 8 June, even if that is a resale. It’s a debate that has raged in Australia’s art world for more than 30 years: should artists be remunerated when their work is resold? In one corner, artists and artist peak bodies say it’s natural justice, as simple as paying royalties to musicians when their songs are played on radio, or authors getting a payment when a customer buys their book. In the opposing corner, auction houses and some art market analysts say their industry is a vulnerable one, that legislating a resale royalty system would drive away buyers and benefit only the richest artists. A resale royalty was one of the recommendation of the 2002 Myer report. Its author, Rupert Myer, calculated that  “if resale royalties were introduced, a substantial amount of benefit would be enjoyed by artists, as estimates indicate that resale royalties calculated on 1990-2000 sales would amount to approximately $6.75 million.” The report also concludes that “the case for a resale royalties scheme is particularly strong for indigenous artists”. This year, European Union countries will be required to apply a resale royalty to the work of living artists. In 2012, resale royalty will apply to all artistic works, including those by dead artists.  Over 72 per cent of the droit de suite collected in France over the last 80 years have gone to the estates of six dead white males. When someone buys a piece of art, it’s a high-risk investment and they have every right to reap the rewards of a high-risk investment. The fact is the vast majority of art actually decreases in value, not increases, when you take into account inflation. When they do increase, we are talking about artists who are already earning enormous amounts of money and are at the top of their tree. In this country we are talking about John Olsen and Tim Storrier. It is estimated that up to 35% of royalties in Australia would go to the estates of Sir Russell Drysdale, Arthur Boyd, Brett Whiteley, Fred Williams and Sir Sidney Nolan

NOTE   >> This information sheet is for guidance only. It is not legal advice. The artists’ resale royalty right Under the Resale Royalty Right for Visual Artists Act 2009 (the Act), artists and their beneficiaries are entitled to a 5% royalty on the resale price for certain resales of their work. There is information about the background to the resale royalty, and a link to the Act, on the website of the Department of the Environment, Water, Heritage and the Arts at www.arts.gov.au/resale_royalty. The government has engaged Copyright Agency Limited (CAL) to collect and distribute artists’ resale royalties. The Act imposes legal obligations on ‘art market professionals’, who include auctioneers, art dealers, art galleries, museums and others involved in the business of dealing in artworks. Art market professionals are obliged to:

• provide certain information to CAL; and

• ensure, together with the buyer and seller, that royalties are paid to CAL to on-pay to artists and their beneficiaries.

Art market professionals are also indirectly affected by their clients’ obligations to provide information and to ensure royalties are paid. Background to the resale royalty right The Act implemented an election promise in the government’s 2007 arts policy. The government’s reasons for the policy are: The introduction of a resale royalty scheme will allow visual artists to share in the commercialisation of their work in the secondary art market. This will benefit visual artists who derive their main creative income from the initial sale of original works. These artists do not have the same range of opportunities as other creators such as writers and composers to earn money through licensing reproductions, public performances or broadcasting their work. Many other countries have resale royalty legislation, including all members of the European Union. Which resales? The obligations to provide information apply to all commercial resales after 8 June 2010, whether or not a royalty is payable on the resale. What is a ‘commercial resale’? A commercial resale is a transfer of ownership that is:

• made for money;

• involves an art market professional (such as a gallery operator, auctioneer or dealer); and

• not the first transfer of ownership.

The first transfer of ownership:

• may not have been for money (it could have been a gift or an inheritance);

• could have been before 9 June 2010; and

• could have taken place outside Australia.

For example, if a person inherited a painting on 9 June 2009 and sold it on 9 June 2010, that is a commercial resale. On the other hand, if a person purchased a painting from a commercial gallery and sold it to a friend, as a private sale, on 9 June 2010, that is not a commercial resale. Which commercial resales require payment of a royalty? A royalty is payable on a commercial resale if:

• the sale price is $1,000 or more;

• the artist is:

— alive; or

— has been dead for fewer than 70 years;

• the artist, or beneficiary of the artist’s estate, is:

— Australian; or

— from another country with resale royalty legislation that is listed in the regulations to the Act;

• it is not the first transfer of ownership after 8 June 2010; and

• the sale is covered by Australian law (for example, it takes place in Australia).

The first transfer of ownership after 8 June 2010 (on which a royalty is not payable) could be the first sale by the artist, a gift, an inheritance or a resale. The sale price includes GST, but excludes any buyer’s premium or other taxes. No countries have yet been listed in the regulations. This will occur after CAL has established reciprocal arrangements with other countries such as the UK, France and Germany. CAL will publish the countries listed in the regulations on its soon to be launched resale royalty website (www.resaleroyalty.org.au), and provide information about where to find the regulations on the government’s ComLaw website. Which artworks? To be covered by the Act, an artwork must be:

• created by the artist; or

• produced under the authority of the artist.

The types of artworks covered include batiks, carvings, ceramics, collages, digital artworks, drawings, engravings, fine art jewellery, glassware, installations, lithographs, multimedia artworks, paintings, photographs, pictures, prints, sculptures, tapestries, video artworks and weavings. Manuscripts are excluded. Limited editions are covered, provided each copy is authorised by the artist. These will include limited edition prints (such as etchings and linocuts), photographs and sculptures. Mass-produced items, such as posters, are excluded. Art market professionals’ obligations Providing information If CAL believes, on reasonable grounds, that an art market professional has been involved in a commercial resale, then the art market professional is required, by the Act, to give CAL information to help CAL work out:

• the amount of the resale royalty (if any) payable on a commercial resale; and

• who is liable to make the payment.

The art market professional must provide the information within 90 days of the request. Information relevant to working out the amount of the royalty (if any) includes:

• the sale price; and

• when and how the seller acquired the artwork.

Information relevant to working out who is liable could include the identity of the buyer and/or seller. CAL envisages, however, that art market professionals will usually collect royalties from buyers or sellers to on-pay to CAL, and the circumstances in which CAL would seek information about the identity of a buyer or seller would be rare. In addition to their legal obligation to provide information in response to a request from CAL, art market professionals may also choose to provide CAL with the information that sellers are required to provide (see below under Sellers’ obligations). Ensuring payment Art market professionals, such as commercial galleries, auction houses and art dealers, have a legal obligation to ensure that royalties are paid. CAL can take legal action against the seller, the buyer, the art market professional or all three to recover the royalty. Sellers’ obligations Providing information Sellers are obliged by the Act to give CAL certain information about commercial resales, in writing, within 90 days of the resale. That information can be given to CAL, on the seller’s behalf, by the art market professional. The information must enable CAL to work out:

• whether a royalty is payable on the resale;

• the amount of the royalty; and

• who is liable to pay the royalty.

The obligation to notify CAL of a resale applies even if:

• it is the first resale after 8 June 2010;

• the sale price is less than $1,000;

• the artist is not Australian or from an eligible foreign country; and/or

• the artist has been dead for more than 70 years.

CAL envisages that in most cases art market professionals will pay the royalty to CAL on behalf of their clients, in which case CAL will not need information about the identity of the buyer and the seller. Sellers also have the same obligation as art market professionals to respond, within 90 days, to a request for information from CAL. Ensuring payment Sellers have the same obligation as art market professionals (set out above) to ensure that the royalty is paid. Buyers’ obligations Providing information Buyers have the same obligation as art market professionals and sellers (set out above) to respond, within 90 days, to a request for information from CAL. Ensuring payment Buyers have the same obligation as art market professionals and sellers to ensure that the royalty is paid. . About Copyright Agency Limited (CAL) CAL is a non-profit organisation, established in 1974, that collects and distributes copyright fees for authors, artists, photographers, publishers and others. CAL was appointed by the Attorney-General in 1990 to collect and distribute copyright fees payable by educational institutions, and by the Copyright Tribunal in 1998 to collect and distribute copyright fees for government use. CAL’s annual report is tabled in Parliament. In addition, CAL adheres to the Collecting Societies Code of Conduct and reports annually to the Code Reviewer, a former Federal Court judge. There is more information about CAL on its website www.copyright.com.au. CAL’s obligations CAL’s obligations under the Act include:

• publishing information about commercial resales on its website;

• collecting royalties on behalf of right holders;

• ensuring that royalties are paid by those liable to pay;

• identifying and locating right holders entitled to resale royalties; and

• paying royalties to right holders.

CAL recognises that, for a range of reasons, it will be easier to establish reporting and payment mechanisms with some art market professionals than with others. But CAL has obligations to all artists to ensure they receive the royalties due to them, and will actively seek to recover those royalties from reluctant as well as cooperative art market professionals. As a condition of its appointment as the collecting society for the resale royalty scheme, CAL is required to report to the government on its administration of the resale royalty scheme. It will also report annually to the Code Reviewer on its adherence to the Collecting Societies Code of Conduct. In addition, CAL is committed to transparency regarding its operations, and will provide information to those interested in the operation of the scheme on its main website (www.copyright.com.au), its soon to be launched resale royalty website (www.resaleroyalty.org.au), and on request. CAL is establishing an Art Trade Resale Royalty Advisory Panel, comprising art market professionals, to advise CAL about how to implement the Act in accordance with current practices.

1 Comment

  1. John Engelen
    John - June 25, 2010

    “In an otherwise good and accurate summary of the act, you neglected to report that artists have a case-by-case right NOT to collect the royalty and /or make their own arrangements regarding collection. The Australian scheme does not involve compulsory usage or mandated compulsory management. The relevant clauses in the Act are 22 and 23.

    The flexibility that this provision for individual rights of choice allows is essential for the adaptability of the scheme to the disparate needs of Australia’s very diverse artists communities. For example, there are often situations in the indigenous art world where actually collecting the royalty would be, from the point of view of the individual artist , nonsensical and harmful.”

    John R Walker
    Artist

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