Artists & Successors

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 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).

• 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 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.

• 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.