What does ‘second resale’ of an artwork mean?

July 20, 2018

While the Resale Royalty Right is generally well understood, we are often asked to clarify the term ‘second resale’ and how it affects eligibility for resale royalty. If used out of context this term can lead to the wrong conclusion on a royalty being due. The term second ‘resale’ is also sometimes confused with second ‘sale’ or ‘transfer’ which adds to the confusion.

The term ‘second resale’ is relevant to artworks in existence when the Act began on 9 June 2010.

The legislation says for these works, “’there is no resale royalty right on the first transfer of ownership of the artwork on or after commencement [of the scheme], even if the transfer of ownership is under a commercial resale.”

This means for those works, the first time they resell after the start of the scheme i.e. they are sold by someone other than the artist, a royalty will not be payable.  The next time they sell (the second resale), royalty will apply, if all other criteria are met.

For example, an artwork created in 1994 and first purchased in 1995 sells at auction in July 2012, after the scheme commenced.  There will be no resale royalty payable on this resale.  The same artwork is sold again through a dealer in November 2017 and this second resale triggers a resale royalty payment.

Relying on the term “second resale” for all works however is incorrect.

In the case of a work that was created or acquired from the artist after the start of the scheme, the first resale will trigger a royalty.  For example, on a trip to Arnhem Land in September 2017, a gallery owner buys a painting outright from an Aboriginal artist. This first, or primary sale by the artist is not eligible for a royalty. The gallery owner then puts the painting up for sale at an exhibition in February 2018, where it sells to a collector. Even though this is the first resale of the work, it triggers a resale royalty payment, as the gallery owner had acquired the work following the introduction of the resale royalty right.

Here’s the easy, fool-proof way to think about it….

The easiest way to think about when royalty applies, is to disregard the terms “first” and “second” resale and ask one question: When did the person who is selling the work, take title of the work from either the artist or a later owner?  Copyright Agency’s resale report asks the question: “Did the seller acquire the work post June 8, 2010?”  If the answer is yes, then royalty will be payable, if all other criteria are met.  If the answer is no, the sale will not attract resale royalty.  Simply ask this question and you won’t go wrong.

The resale royalty team is available to assist artists, estates and art market professionals on 1800 066 844 or resale@copyright.com.au

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