Artists to benefit from Resale Royalty Right

Aboriginal Art Directory | 04.10.08

A resale right for Australia's visual artists is expected to be in place by 1 July 2009, Arts Minister Peter Garrett said today.

Mr Garrett said legislation would be introduced into the Parliament before the end of the year to establish the right which would ensure visual artists received a portion of the proceeds from the resale of their works.

During a visit to Papunya Tula Gallery in Alice Springs the Minister acknowledged the enormous contribution of Australia's artists to the cultural landscape and the significant growth in the Indigenous art market.

"The introduction of a resale royalty right is a landmark moment for Australia's visual artists," Mr Garrett said.

The announcement follows government agreement to a resale royalty scheme which will involve a mandatory five per cent artist's royalty on resales of artworks, when sold for $1,000 or more. The resale royalty right will apply to works by living artists and for a period of 70 years after an artist's death.

"By enshrining in law the right of artists and their heirs to receive a benefit from the secondary sale of their work, we are building an environment where the talent and creativity of visual artists receives greater reward and recognition."

"This is an incredibly significant outcome for visual artists in Australia who in future will benefit financially when their works are sold on the secondary art market. Introducing a resale royalty scheme will help to address a current imbalance, where visual artists benefit less from copyright than other creators, such as authors and composers."

There will also be regulatory benefits particularly for Indigenous artists, who have experienced significant increases in the value of their work, through improved transparency and record keeping in the art market.

Resale royalties will be collected and distributed to artists by a single collecting organisation, which will be selected by the Government through a competitive tender process. The scheme will be introduced to suit the needs of Australia's secondary art market and will only apply to resales of original works acquired after the scheme takes effect.

"The Government has announced a scheme which balances the unique characteristics of the Australian art market as well as maximising benefits to artists," Mr Garrett said.

"Today's announcement fulfils an election promise and reinforces the Government's commitment to a vibrant and sustainable arts sector."

Visit www.arts.gov.au/artists/resaleroyalty for more information on the government's resale royalty scheme.

Media contact: Kate Pasterfield 0437 965 071
Australia's new Resale Royalty Scheme: How will it work?

Form of legislation
A resale royalty right will be introduced through stand-alone legislation to ensure artists and art market professionals fully understand their rights and obligations.

Application
Prospective application - the royalty will be applied only to resales of original works of visual art sold through the secondary art market where the seller has acquired the work after the legislation takes effect. It will not be restricted just to works created after the scheme starts.

Nature
The right will be inalienable and unable to be waived.

Entitlement
Royalties are to be paid to artists who are Australian citizens or permanent residents, or their heirs.

Definition of work of art
The right will cover original works of graphic or plastic art, such as a painting, a collage, a drawing, a limited edition print, a sculpture, a ceramic, an item of glassware or a photograph. This definition reflects similar arrangements in the EU.

Duration of right
It will cover works being resold during an artist's lifetime and for 70 years after the artist's death.

Liability
Joint and several liability - where the seller and the other 'relevant person' in the resale are jointly and severally liable to pay. The 'relevant person' is taken to be, in sequence, the agent of the seller, or the agent of the buyer, or, the buyer. This arrangement works effectively in the UK.

Definition of resale
The scheme will include all resales involving art market professionals, public institutions or organisations, and all resales subsequent to the first transfer of ownership, regardless of whether the first transfer was made by sale, gift or any other means.

Rate
Royalty to be calculated on a flat rate of 5%, uncapped.

Threshold
The minimum resale price before a royalty is imposed will be $1000.

Administration
The scheme will be managed by a single collecting organisation, appointed by the Australian Government following an open tender selection process.

International reciprocity
Works by Australian artists sold overseas may also be eligible for royalty payments under the multilateral copyright treaty, the Berne Convention for the Protection of Literary and Artistic Works.
Other countries that acknowledge a resale royalty right for visual artists:

Algeria, Austria, Belgium, Bolivia, Brazil, Bulgaria, Burkina Faso, Congo, Costa Rica, Cyprus, Czech Republic, Denmark, Ecuador, Estonia, Finland, France, Germany, Greece, Guinea, Holy See, Hungary, Italy, Ireland, Ivory Coast, Latvia, Lithuania, Luxembourg, Madagascar, Mali, Malta, Mongolia, Morocco, Netherlands, Paraguay, Peru, Philippines, Poland, Portugal, Romania, Russian Federation, Senegal, Slovakia, Slovenia, Spain, Sweden, Tunisia, Turkey, United Kingdom and Uruguay.
Prospective application

Prospective application means the new resale royalty right will apply to the resale of all works of art acquired after the legislation comes into effect.

It does not mean the resale royalty right applies only to works created after the legislation comes into effect. Resales of existing works of art acquired after the right commences, including works by deceased artists, will be covered by the scheme.

This is to ensure that buyers of works of art make their purchases with the knowledge that a royalty may be payable if they decide to re-sell works.
Examples of how the prospective resale royalty right will work:
Deceased estate

A sculpture created in 1994 by a now-deceased artist and first purchased in 1995 sells at auction for $800,000 in August 2009, after the resale royalty right legislation has come into effect.

There will be no royalty payable to the artist on this sale, as it is the first transfer of ownership of the work following the introduction of the resale royalty right.

The same sculpture is sold again through a dealer in July 2010 for $900,000. This second sale triggers a royalty payment of $45,000 (less administration costs) which would be paid to the heir of the deceased artist.
Inheritance

A collector who had purchased a limited edition etching in 2001 for $5,000 dies in 2010, after the resale royalty right legislation comes into effect, and leaves the etching to her son in her will.

In 2012, the son sells the etching at auction for $7,000. This resale triggers a royalty payment to the artist of $350 (less administration costs), as the seller (the son) had acquired the work following the introduction of the resale right.
Indigenous art

In July 2009, after the resale royalty right legislation has come into effect, a gallery owner negotiates with an Indigenous art centre the outright purchase of a range of works. One canvas is purchased for $10,000.

The gallery owner puts the work up for sale at an exhibition in December 2009, and the canvas is purchased by an investor for $16,000.

A royalty payment to the artist of $800 (less administration costs) is triggered as the gallery owner acquired the work following the introduction of the resale right.

For more information: www.arts.gov.au/artists/resaleroyalty

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