Under the Act, Australian visual artists and craft practitioners are entitled to a payment of 5% of the value of the resale price on eligible artworks that are sold for $1000 or more, and the royalty is also payable to their heirs on sales made for 70 years after the artist’s death. Whilst not payable on the initial sale of an artwork, the royalty is payable on all ‘resales’.
Senator Brandis has the task of making recommendations to improve the Act, address the implementation issues and decide on the legislative future of the scheme. Seventy-five submissions were received from very passionate and engaged stakeholders, including: artists, gallerists, auction houses, art centres, arts bodies such as NAVA, Viscopy and the Australia Council for the Arts and the Copyright Agency who administers the RRS. There were also insights offered from legal and accounting firms associated with the arts industry.
The most frequently commented upon issues were as follows:
-
Many submissions, notably from Arts Law, NAVA and numerous indigenous arts representatives, were strongly supportive of the RRS and anxious to see the scheme retained and strengthened.
-
The relatively high rate of the Australian RRS, particularly when compared to international schemes in Europe and elsewhere. Not only is our RRS the highest in the world, it is imposed at a flat rate and has no ceiling. Fellia Melas Gallery’s submission explains that “the Droit de Suite in Europe is capped at €12,500…the tiered commission takes into account the need for a sliding scale…at most it charges 4% on works costing up to €50,000 and works over €500,000 only attract a 0.25% royalty.”In today’s terms (Aug. 2015) this means that the equivalent commission would be paid in Australia on a $372,000 work as is paid in Europe on a work worth €10 million, i.e. €12,500 or AUD$18,598.
-
The fact that the royalty is payable by a seller even when they have incurred a loss on the sale of a work. Some point to the fact that the value most contemporary artwork decreases in value and that the RRS is a stringent disincentive for collectors who support young and emerging artists.
-
The RRS is currently applied to the sale price of the artwork including any GST component (mainly applicable to gallery sales) and it is considered highly unfair to be paying an artist 5% of a tax.
-
The appropriate value for an artwork to be liable for RRS is hotly contested, with many submissions from gallerists arguing that it ought to be raised from $1,000 to $5,000 or $10,000 and some artists suggesting figures of $500 and less. This debate is part of a larger general discussion relating to the administrative burden imposed on many small businesses responsible for reporting and, in some cases, making payments directly to artists.
-
The question of how long the RRS applied to sales (currently set at 70 years after the death of the artist) was also debated and generally - though not exclusively - considered too long.
-
The opt-out provision in the Resale Act allows artists to choose not to receive payments on a case-by-case basis. Some contributors considered this paternalistic and administratively burdensome, others think that it should be able to be relinquished in one instance for all sales of an artist’s work and the Copyright Agency believes that the opt-out provision deprives them of much needed income. This has occurred on some lucrative sales when artists chose to have dealers manage the royalty payment to avoid paying a 10% administration fee to the copyright agency.
-
Further to this is the issue of the Government’s commitment to subsidise the administration of the RRS until it can be self-supporting, another contentious problem for the Review.
-
The wording within the Resale Act, as to whether the vendor, the vendor’s agent or purchaser is responsible for the royalty payments has led to confusion and received a great deal of criticism.
-
Many submissions made reference to the perception that those most advantaged by the RRS were those successful artists least in need of assistance. Arguments were voiced and statistics proffered both for and against this contention.
-
Anomalies in the RRS came in for much criticism; for example, the fact sales between individuals are exempted from the scheme.
Since 2008 the Australian art market as a whole has contracted dramatically and this point was made in numerous submissions to the Review. The problem is that the effects of the global financial crisis and the implementation of restrictive changes to the regulations surrounding the ownership of artworks in superannuation funds, have also had a negative impact. The extent that the RRS has contributed to the malaise of the industry is difficult to quantify, but fundamental to the debate and to the Minister’s Review.
When approached this week for comment as to when we may expect an announcement from the Minister about the Review, a spokesperson for the Attorney General’s Department said:
The Minister for the Arts is considering the Resale Royalty Scheme Review’s findings prior to making any decisions about the future of the Scheme. As at 30 June 2015, the Scheme has generated more than $3.4 million in royalties from 10,700 resales of work by 1055 artists.
Those of us with an interest in the Arts Industry, whatever our perspective, wait in anxious anticipation.
For more information please go to:
