Frequently asked questions. If you have a question you need a response to please submit this to us via the contact form here
For Art Market Professionals
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How does the scheme affect Art Market Professionals?
There are legal obligations for Art Market Professions which require them to:
- report qualifying resales of original visual artworks to RRA; and
- pay to RRA* the resale royalty payable in respect of each qualifying resale. The seller is also jointly & severally liable for payment.
These are explained in our Guide: Information for Art Market Professionals.
Please register to stay informed about your obligations under the scheme, and to receive administrative support with compliance.
(*This assumes the Art Market Professional is acting as agent for the seller on a resale. In cases where there is no agent for the seller, then instead the buyer’s agent or the buyer will be jointly liable with the seller to make payment).
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Who is an Art Market Professional?
The Act defines “Art Market Professionals” in section 11 as:
(a) a person who carries on business as an auctioneer (within the meaning of section 5(3) of the Auctioneers Act 2013):
(b) an art dealer:
(c) an art consultant:
(d) the owner or operator of an art gallery that deals in visual artworks:
(e) any other person who is in the business of dealing in visual artworks.
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How much is the resale royalty payment?
The amount is the same for both eligible artists and successors, who can receive a royalty payment of 5% of the resale value (minus administration costs) 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 distribute 80% of the royalty collected to the eligible right holder (provided they can be found), and retain 20% of the royalty for the purpose of funding its operations under Scheme. This means the artist will receive a net distribution of 4% of the resale value, and RRA will retain 1% of the resale value to fund its collection, distribution, and other functions.
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Who is liable to pay the resale royalty?
The following persons are jointly and severally liable to pay the 5% resale royalty to RRA (section 17, of the Act) :
- The seller, and either
- the agent acting for the seller on the resale (usually the AMP); or
- if the seller does not have an agent, the agent acting for the buyer on the resale; or
- if there are no agents, the buyer.
- The seller, and either
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RRA policy on non-compliance
(sections 26 & 27, the Act)
If a liable person fails to pay a resale royalty, or fails to provide the required reporting information, or if any other requirement of the Act is not complied with, then the Act provides that the Collection Agency may apply to a court for orders enforcing these obligations, and for any other order that is appropriate for an infringement of a property right. The Act provides that this does not limit any other proceeding that may otherwise be taken by the Collection Agency, a right holder, or any other person affected. Nor does it limit any other power of the court.
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How will the scheme work for galleries who often buy at auction to re-sell? Will the royalty be payable twice?
A royalty is payable on each resale.
Who is liable in each instance is answered by section 17 of the Act. The seller is always liable, and generally their agent will be jointly and severally liable. Generally a buyer won’t be liable unless no agent is involved.
To give two contrasting examples:
Where a gallery buys from an auction house or art consultant (who is acting behalf of a seller), the liable parties will be the seller and the seller’s agent (i.e. auction house or art consultant). It’s unlikely the purchasing gallery would be liable in this scenario (unless the seller actually has no agent, and the buyer has no agent).
Where a gallery buys directly from another gallery (without using any agents), then the buying gallery will indeed be jointly liable with the selling gallery to pay the royalty on the purchase. (How the two galleries share this liability will be a private matter). The buying gallery will then be liable as a seller if/when they come to resell.
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AMPs have differing costs associated with resales. Is it fair that AMP’s costs aren’t factored into the calculation of the royalty
Art market professional’s concerned about whether the royalty accounts for differing AMP costs should note that the royalty is calculated exclusive of (i.e. disregards) any costs associated with the resale.
This leaves it up to the art market professional, the buyer, and the seller, to freely agree their costs, premiums, commissions etc and determine what is, in their particular circumstances, fair and lawful between them.
It is not the purpose or function of the legislation to presume, dictate, or discriminate those private commercial arrangements. Instead, the legislation creates a predictable royalty by using a fixed percentage of the resale value. This is the same for every qualifying resale, and every liable AMP.This creates benefits to art market professional and artists alike. Negotiation, custom, and freedom of contract, will determine fairness between parties to the resale contract as to their own costs, premiums etc. And whatever they freely decide about those (and however that varies case-by-case), won’t prejudice or affect the “resale value” or the royalty total, which also ensures transparency and fairness to the artist.
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How does it work when an art consultant facilitates a resale between two private parties?
The resale is considered a professional resale because an art market professional is involved. That means, provided it meets the standard criteria, it will be a qualifying resale.
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How is the resale value calculated?
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”
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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).
For Artists
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How much is the resale royalty payment?
The amount is the same for both eligible artists and successors, who can receive a royalty payment of 5% of the resale value (minus administration costs) 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 distribute 80% of the royalty collected to the eligible right holder (provided they can be found), and retain 20% of the royalty for the purpose of funding its operations under Scheme. This means the artist will receive a net distribution of 4% of the resale value, and RRA will retain 1% of the resale value to fund its collection, distribution, and other functions.
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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.
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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 eligibility (above).
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What do I need to do as a Visual Artist?
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
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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:
- payment of all or part of a resale royalty; and / or
- 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)).
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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)).
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How is the resale value calculated?
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”
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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.
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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).
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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.
For Successors
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How much is the resale royalty payment?
The amount is the same for both eligible artists and successors, who can receive a royalty payment of 5% of the resale value (minus administration costs) 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 distribute 80% of the royalty collected to the eligible right holder (provided they can be found), and retain 20% of the royalty for the purpose of funding its operations under Scheme. This means the artist will receive a net distribution of 4% of the resale value, and RRA will retain 1% of the resale value to fund its collection, distribution, and other functions.
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When does the resale right expire?
In the case of deceased eligible artists, their resale right may or may not have expired. A resale royalty will only be payable if the contract for the resale was entered into on or before the following expiry dates (as applicable):
- (where the artwork is by a single artist) – the expiry date is 50 years from the end of the calendar year in which the artist died
- (where the artwork was created jointly by 2 or more artists) – the expiry date is 50 years passed from the end of the calendar year in which the last of those artists died.
If the resale contract was entered on or before the expiry date, a resale royalty is payable.
If the resale contract was entered into after the expiry date, no resale royalty is payable.
Deceased Artists: After an artist’s death, the right to receive the resale royalty payment passes to their successor. However, the successor must meet the same eligibility requirement to receive payment (meaning they are a citizen or domiciled or resident in New Zealand or a reciprocating country (or in the case of a body corporate, they are incorporated, registered, or carrying on business in New Zealand or a reciprocating country).
However, in the case of deceased eligible artists, their resale right may or may not have expired. To check an expiry date see STEP 4 in the Criteria section (above).
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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:
- payment of all or part of a resale royalty; and / or
- 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)).
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How is the resale value calculated?
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”
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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).
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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.
Buyers and Sellers
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How are voluntary qualifying resales enforced?
A “Voluntary Qualifying Resale” means that all parties to the resale agree in writing that the resale is a qualifying resale for purposes of the Act; and what % of the resale value they agree will be payable to the artist as a resale royalty; and who will provide the relevant information to the Collection Agency.
If these conditions are met, and reported to RRA, then RRA will treat the voluntary qualifying resale like any other for the purposes of the Act, including in regard to enforcement.
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How does it work when an art consultant facilitates a resale between two private parties?
The resale is considered a professional resale because an art market professional is involved. That means, provided it meets the standard criteria, it will be a qualifying resale.
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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.
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Who calculates resale value in a “voluntary qualifying resale”?
Section 9(3) of the Act states that in order for a resale to be a “voluntary qualifying resale” all the parties to the resale agree in writing that the resale is a voluntary qualifying resale, and what percentage of the resale value will be payable as the ARR, which in effect means both the buyer and the seller. (In addition to agreeing on the value of the resale royalty both the buyer and the seller will also need to determine who is responsible for notifying and paying RRA the royalty amount.) See Checklist 1 for more details.
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Who is liable to pay the resale royalty?
The following persons are jointly and severally liable to pay the 5% resale royalty to RRA (section 17, of the Act) :
- The seller, and either
- the agent acting for the seller on the resale (usually the AMP); or
- if the seller does not have an agent, the agent acting for the buyer on the resale; or
- if there are no agents, the buyer.
- The seller, and either
Publicly funded Galleries, Libraries, Archives and Museums (GLAM)
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How does the scheme apply to GLAM organisations?
This section applies to:
- publicly funded art galleries; and
- publicly funded museums, libraries, and archives that collect and display artworks (“GLAM”).
Three ways the Scheme affects GLAM:
- GLAM are not Art Market Professionals (AMPs).
- However, resales involving GLAM do fall within the Scheme. If any GLAM is involved in a resale of original visual artwork it may still count as a “professional resale” (and therefore a “qualifying resale”). (See Step 1 of the Criteria to learn what a qualifying resale is).
- GLAM don’t have liability for paying the royalty. Generally, GLAM aren’t required to report to RRA on qualifying resales either, UNLESS there are no Art Market Professionals involved in the resale. In that event, then each GLAM will be responsible for reporting information about the resale to RRA.
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But aren’t Universities publicly funded?
Just because a University receives some public funding for its operations, does not make it a “publicly funded art gallery” or “a publicly funded archive that collects and displays artworks”. Universities receive funds and revenue from many sources. Any artworks the University has collected and displayed may have been purchased other than with public funds (e.g. through University operating revenue, sales of assets, or private bequeathments or foundations). The proportion of public funding it does receive is likely to be ear-marked and attached to tuition, rather than for the purpose of operating an art gallery or archive to collect and display artworks.
Universities may establish special bodies to collect and display artwork. But unless that special body is in effect operating as an art gallery or archive (etc) that collects and displays artworks, and its operation is publicly funded (e.g. it applies for and receives public funding for that purpose) then resales involving that body are unlikely to automatically qualify as a professional resale (unless an AMP or GLAM is involved in the resale).
Educational Institutions and other organisations
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How does an educational institution sit with respect to the Scheme? Are their resales “professional resales”?
Section 9(2)) mentions publicly funded libraries, museums, and archives that collect and display artworks (GLAM), but not universities, who have extensive collections.
To be a “professional resale”, at least one person involved in the resale must be:
- an Art Market Professional or
- a publicly funded art gallery; or
- a public funded museum, library, or archive that collects and displays artwork.
(from section 9(2)(a)(i) to (iii)).
Universities and other educational institutions are clearly not listed in this definition, which means their sales and purchases of artwork won’t automatically be classified as a “professional resale”.
However, their sales and purchases will still qualify as a professional resale if at least“1 person involved in the resale” satisfies (a), (b), or (c) above. Examples include (but aren’t limited to):
- the University is buying from an Art Market Professional;
- the University is buying from a publicly funded archive that collects and displays artworks (or other GLAM);
- the University is selling and using an auctioneer to assist with the resale;
- the University is selling, and has engaged an art consultant to assist with a private resale;
- the University is selling to a private buyer, who is using an Art Market Professional or an art consultant to assist them with the resale;
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But aren’t Universities publicly funded?
Just because a University receives some public funding for its operations, does not make it a “publicly funded art gallery” or “a publicly funded archive that collects and displays artworks”. Universities receive funds and revenue from many sources. Any artworks the University has collected and displayed may have been purchased other than with public funds (e.g. through University operating revenue, sales of assets, or private bequeathments or foundations). The proportion of public funding it does receive is likely to be ear-marked and attached to tuition, rather than for the purpose of operating an art gallery or archive to collect and display artworks.
Universities may establish special bodies to collect and display artwork. But unless that special body is in effect operating as an art gallery or archive (etc) that collects and displays artworks, and its operation is publicly funded (e.g. it applies for and receives public funding for that purpose) then resales involving that body are unlikely to automatically qualify as a professional resale (unless an AMP or GLAM is involved in the resale).
General
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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)).