Proposed Resale Royalty for Visual Artists

New laws introduced

The great news for visual artists is that after many years of campaigning it is likely a resale royalty right will become part of Australia’s laws. Arts Law is delighted the Government is implementing its election commitment to introduce resale royalties. The disappointing news is that in its current form it will be many, many years before a significant number of artists see a real benefit through the resale royalty right. This is because for works created prior to 1 July 2009 the resale royalty will not apply on the first resale, only the second and subsequent resales.

The information below sets out the proposed laws, which were introduced to Parliament on 27 November 2008.(1) These will be subject to debate in Parliament and may be amended before being passed or rejected entirely; Arts Law certainly supports the laws being passed but hopes it will be subject to amendments that will see an improved outcome for visual artists.

The resale royalty

A resale royalty right gives visual artists the right to receive a percentage of the sale price of an artwork they created whenever it is resold: currently the artist receives nothing and only the art investor benefits when the artwork is resold at an increased value.(2) It is proposed that from 1 July 2009 onwards, a resale royalty of 5% apply to the commercial resale of artworks sold for $1,000 or more. The $1,000 threshold is calculated inclusive of GST but exclusive of any other tax or buyer’s premium. There is no cap on the amount of a resale royalty and the artist is entitled to the royalty irrespective of who owns the title (the physical artwork) or copyright in the work.

A commercial resale occurs when works are resold through auction houses, art galleries and art dealers. The royalty is not payable on private sales or when the work is sold for the first time. For works that were created before 1 July 2009, the resale is not payable on the first transfer of the work occurring after 1 July 2009, even if this is a commercial resale.

Arts Law believes all commercial resales should qualify for the royalty so that:

• artists receive entitlements to royalties much sooner;
• the administration of the scheme is easier and more cost effective; and
• buyers and sellers can easily determine whether the resale applies to the work, thereby reducing confusion and uncertainty in the art market.

Arts Law is also seeking a reduction in the threshold – we believe the resale royalty should be available for sales of artworks for $500 or more. This would mean that for each commercial resale of an artwork for $500, the artist would get $25.

Types of artworks

The definition of ‘artwork’ includes pictures, collages, paintings, drawings, engravings, prints, lithographs, sculptures, tapestries, ceramics, glassware and photographs. It also includes artwork created under the authority of an artist or artists. Thus the person who receives the resale royalty on the resale of a bronze sculpture is the artist who has designed the sculpture and not the person who cast the work. It has been indicated that the royalty is intended to be payable on limited editions that have been authorised by the artist or artists involved and new media art forms such as digital and video art, but not films.(3)

Works of joint authorship

Where more than one artist has created an artwork, the resale royalty will be shared equally among them unless they agree otherwise. If an artist who created an artwork of joint authorship passes away then that artist’s share passes to his or her heirs and not to the other artists of the artwork.

Other features of the resale royalty right

The resale royalty right will last for the same period of time as copyright in the work, which is for the life of the artist plus 70 years. The right can’t be waived and is inalienable, which means it can’t be given away although it can pass to heirs. These provisions are aimed at ensuring artists receive the royalty and to avoid artists being persuaded into selling their royalty to someone else or being pressured into not charging the royalty on a resale of their painting. The royalty is only available on a commercial resale in Australia where the artist is an Australian citizen, Australian permanent resident or a national or citizen of a country that has reciprocal arrangements with Australia for resale royalties.

Who has to pay the royalty?

In some countries where there is a resale royalty, only the seller is liable to pay the resale. This frequently creates difficulties in ensuring the payment gets to the artist. To prevent this, the proposed laws make both the seller and the buyer or person acting for the buyer jointly and severally liable to pay the royalty. It is likely that over time a standard practice within the industry will emerge as to who actually pays the resale royalty and that this will be a contractual matter between the seller and the buyer or their agents.(4)

The collection of the royalty

The Government will put out calls for organisations to tender to be the collecting society for the resale royalty. The collecting society must be a not for profit company and the government is able to limit the amount of administration fees charged by the collecting society to ensure a fair proportion of the royalty ends up in the artist’s pocket.

CARR – campaigning for a fairer deal

CARR is the Coalition for an Australian Resale Royalty. The members of CARR are the Arts Law Centre of Australia, the Australian Copyright Council, the Copyright Agency Limited, the International Confederation of Societies of Authors and Composers (CISAC), the National Association for the Visual Arts (NAVA) and Viscopy.

CARR wants a fairer deal for artists and at the least for:

• the threshold to be reduced from $1,000 to $500; and
• the royalty to apply to all commercial resales after 1 July 2009.

What you can do

There will be no debate in Parliament about the laws before 20 February 2009, as the proposed laws have been referred to a Parliamentary committee for consideration and a report is due by 20 February 2009.(5) We strongly encourage people to get in touch with the Government, especially Minister Garrett, and to make submissions to the committee. Submissions to the committee are due by Friday 23 January 2009.(6) If you don’t have time to make your own submission, then get in touch with one of the CARR members and either support their submissions or provide some basic input that can be included in their submissions. You can also sign the CARR postcard or online petition here. Act now!

Getting copies of the new laws

If you want to read the proposed new laws, the best place to start is with the Explanatory Memorandum and the Bill.(7) These are both available from the Australian Parliament House website here.  This takes you to the committee page which provides a direct link to the Bill (the first reading speech link) and the Explanatory Memorandum.

Serena Armstrong is a solicitor with Arts Law
 

Footnotes

1. See the Resale Royalty Right for Visual Artists Bill 2008 (Cth), which was introduced to the House of Representiatives by peter Garrett, Minister for Environment, Heritage and the Arts.

2. For an article that considers the justification for resale royalty rights see Virginia Morrison's, 'A resale royalty right for Australia' in ART+law, June 2008.

3. See the Explanatory Memorandum, resale royalty Right for Visual Artists Bill 2008 (Cth), pages 4-5.

4. Explanatory Memorandum, above, page 13.

5. The committee reporting on the proposed laws is the Standing Commitee on Climate Change, Water, Envirenment and the Arts.

6. For more details see the Australian Parliament House website.

7. Resale Royalty Right for Visual Artists Bill 2008 (Cth).