For Artists

• Can the Auction House put a fee on top of the sale to cover that 5%? Is it on the hammer price? 

  The resale royalty payable is calculated at 5% of the “resale value” of the qualifying resale (section 16).

  Section 10 says that “resale value” means: “the value of the consideration given for the visual artwork under the contract for resale”. 

  This may include:

  • the amount paid in New Zealand dollars;  
  • the value of goods and/or services paid in kind;  
  • (if paid in another currency), the amount converted to NZD at the date of payment.   

  It does not include:

  • goods and services tax (GST; or
  • duties, levies, or taxes (etc) under the Customs and Excise Act 2018; or
  • “any costs associated with the resale, for example, a commission or a buyer’s premium” 

  So, the Auction House / Art Market Professional’s fees would be a cost or premium or commission associated with the resale, and are therefore excluded from the calculation of “resale value” or the royalty. 

  Auction Houses and other Art Market Professional’s must be cognisant of other rules in the Act that prohibit waiving, charging, repaying or sharing the royalty: 

  • An artist cannot ‘alienate’ their royalty right during their lifetime (s 13).  This means an artist cannot lose, sell, license, assign, charge, or waive their resale right during their lifetime, and any agreement to do so is void (s 13(2)). 
  • Any agreement to repay the resale royalty is void (s 17(5)), as is any agreement to share the royalty (except where the Act provides that a royalty can be held in shares e.g. where there are joint artists (s 12), or multiple successors (s 14(4)). 

• How do artists from countries other than NZ benefit from resale royalties?

  Australia and the United Kingdom are reciprocating countries. RRA collects royalties for Australian and United Kingdom artists when they make a qualifying resale in New Zealand, and vice versa.

• How does Section 7(3) of the Act relate to “commissioned” artwork?

  Section 7(3) of the Act states “An artist has a right under this section irrespective of whether they are or were the first owner of copyright in the artwork.”

  This means that if the artwork was “commissioned” (as per Section 21(3) of the Copyright Act), then the artist who created the artwork is not the first owner of the copyright, and is still therefore potentially eligible for the artist resale royalty, as long as they are an “Eligible Artist”, the artwork is an “original visual artwork” by the artist, and the resale occurs before the right to receive the ARR has expired (see checklist 4 for more detailed information on when the ARR right expires).

• How much is the resale royalty payment?

  The amount is the same for both eligible artists and successors, a 5% royalty will be collected for eligible artists each time there is a qualifying resale of their original visual artwork. 

  The collection and distribution of the payment is managed by RRA, a not-for-profit. RRA will retain 20% for the purpose of funding RRA operations and distribute the remainder of the royalty to the visual artist or successor.

• What can an artist do if they don’t want to accept a royalty? 

  How to decline payment (s 19 the Act, & clause 12 the Regulations) 

  A right holder may opt to decline to receive:  

  1. payment of all or part of a resale royalty; and / or  

  2. payment of a resale royalty on the future resale of any or all of their visual artworks.    

  They do this by giving written notice to RRA (the collection agency).   

  This doesn’t mean they lose their resale right.  It simply means they are opting to decline to receive payment of all or part of a resale royalty/ies. 

  Opting back in for future resales (s 19(3) the Act, & clause 13 the Regulations) 

  If the right holder has declined payment of a resale royalty on future resales, they may nevertheless opt back in to receive payments on future resales of any or all artworks previously declined.  They do this by giving written notice to the collection agency.   

  What happens to the declined royalty? (clause 14 the Regulations) 

  If a right holder declines to receive payment of any amount of a resale royalty, RRA must:  

  • transfer the amount to a cultural fund established under the Act; 

  • if there is no cultural fund established, return the amount to the person who paid the resale royalty under the Act; 

  • if there is no cultural fund, and the person who paid the royalty cannot be found, use the amount to fund the activities of the collection agency under the Act. 

  Can I get rid of, or repay, or sell, or share my resale right? 

  For artists: An artist cannot ‘alienate’ their royalty right during their lifetime (s 13).  This means an artist cannot lose, sell, license, assign, charge, or waive their resale right during their lifetime, and any agreement to do so is void (s 13(2)).   

  For successors:  A successor may transfer the resale rights they hold to another person, as personal property, by (a) assignment; or (b) testamentary disposition; or (c) operation of law (s 14(2)). 

  For both: Any agreement to repay the resale royalty is void (s 17), as is any agreement to share the royalty, except where the Act provides that a royalty can be held in shares e.g. where there are joint artists (s 12), or multiple successors (s 14(4)). 

• What do I need to do as a Visual Artist or Successor?

  Visual artists (and their successors):

  • Please register your interest with RRA to ensure timely payment to you. 
  • Registering your eligibility in advance greatly assists RRA to administer the scheme on your behalf.  It assists RRA to identify, collect, & distribute your royalty payments to you in a timely fashion

• What is an “original visual artwork”?

  Checklist 2.1:  If any of the following boxes are checked, the work is a “visual artwork”:  

  • cultural expressions of Māori or Pacific peoples;
  • painting, drawing, carving, engraving, etching, lithography, woodcutting, printing (including a book of prints);
  • sculpture, collage, modelling;
  • craftwork, ceramics, glassware, jewellery, textiles, weaving, metalware, furniture;
  • photography or video art;
  • multimedia art;
  • art created using computers or other electronic devices;
  • ethnic or cultural art that is a variation of any type of work described above in the 2nd through final bullets.

  However, visual artwork does not include:

  • a building*;
  • a dramatic work* or musical work*;
  • a literary work*, unless it is a compilation that includes a visual artwork.

  * (These terms are defined in s 2(1) of the Copyright Act 1993)

  Checklist 2.2: To be an “original”, the visual artwork must have been:

  • Created by, or under the authority of, the artist; or
  • One of a limited number of copies of visual artwork made by that artist or under their authority.

• What is IRD tax guidance for artists?

  Artists are entitled to receive a payment each time their art is resold (a resale payment). These payments may be taxable.

  If you are an artist who was in business when your artwork first sold, you need to pay income tax on resale payments for that art. This is because resale payments are not taxed before they are paid to artists.

  RRA’s admin fee “is a deductible expense” for artists who are in business.

  Read the full IRD ‘Resale payments for artists’ here.

• What is the duration of the resale right period and will this change with the Copyright Act review?

  Section 15 of the Act states that the duration of the ARR right is 50 years from the end of the calendar year that the (eligible) artist dies, (or if 2 or more artists create the qualifying artwork, then 50 years from the end of the calendar year that the last surviving artist dies). This is the same duration as Copyright under the Copyright Act 1994, which would imply that the ARR is linked to the duration of Copyright however nothing in the legislation confirms this.

• What is the process for claiming an unpaid resale royalty?

  RRA will periodically inspect and audit published auction sale results to monitor compliance with the Act and Regulations.  However, because we rely on art market professionals and other stakeholders in the Scheme to notify us of resale payments that are due on qualifying resales, we may occasionally not be aware of a qualifying resale.

  A Right Holder who believes that a qualifying resale has taken place is encouraged to notify us through the “Contact Us” form available on our website. 

  Right Holders have 6 years from the date of the qualifying resale to notify us of any claim from the date of the resale.  After that period expires, we will have no liability to the Right Holder to collect or pay the resale royalty.

  If a Right Holder wishes to notify us of a resale royalty they think they are owed, they must provide us with:

  • Evidence that the person is the Right Holder
  • Evidence that the relevant resale is a qualifying resale
  • The names of the persons liable under section 17 of the Act to pay the resale royalty, if known.

  On receipt of such a notice from a Right Holder, we will use reasonable efforts to verify the claim.  If the claim is verified and we have not already processed the relevant resale royalty payment, we will notify the persons who are liable to pay the resale royalty of their obligations under the Scheme and follow our process set out above for collecting and distributing the resale royalty payment.  We will then have no further obligation to the Right Holder until we receive the resale royalty payment.  While we will use reasonable efforts to resolve claims, we cannot guarantee any particular outcome.

• When is a resale royalty payable?

  An eligible artist” (or their successor) has a right to be paid a resale royalty each time there is a “qualifying resale” of an “original visual artwork” by that artist (provided the resale right had not “expired” at the time of resale)

   Use the flowchart in the Criteria section of the Homepage to apply this test in 4 Steps.

• Who is an “eligible artist”?

  Checklist 3.1 IF the artist is alive at the time the contract for resale is entered into:  is the artist:

  • a New Zealand Citizen, or a person domiciled or resident in New Zealand; or
  • a citizen or subject of, or a person domiciled or resident in,  a “reciprocating country”

  If you ticked either of these boxes, then the artist is an eligible artist. 

  Checklist 3.2 IF the artist is deceased at the time the contract for resale is entered into:  at the time of their death was the artist: 

  • a New Zealand Citizen, or a person domiciled or resident in New Zealand; or
  • a citizen or subject of, or a person domiciled or resident in, a reciprocating country

  If you ticked either of the above, then the deceased artist is an eligible artist.  Although the eligible artist is deceased, the resale right is held by their successor(s) (meaning the successor(s) are entitled to payment of the royalty, provided they meet the same criteria for eligibilit