House of Representatives

Second Reading Speech

Mr Shorten (Parliamentary Secretary for Disabilities and Children's Services and Parliamentary Secretary for Victorian Bushfire Reconstruction)

I move:

That this bill be now read a second time.

This bill amends the tax law to apply a streamlined tax treatment to payments made in relation to the resale royalty right for visual artists, instead of the more complex trust taxation rules which would otherwise apply.

The proposed resale royalty right, which the Resale Royalty Right for Visual Artists Bill 2008 will establish, entitles eligible visual artists to a royalty payment on the sale price of any commercial resale of their original works of art over $1,000 for works acquired after that legislation takes effect. This will allow visual artists to share in the commercialisation of their work in the secondary art market. The resale royalty payable is five per cent of the sale price.

This bill ensures that the body appointed by the arts minister as the resale royalty collecting society is not taxed on amounts it collects on behalf of resale royalty right owners and holds pending allocation to them. Specifically, the bill exempts from income tax in the hands of the collecting society resale royalties, and interest on resale royalties, collected or derived by the collecting society. The collecting society is also not taxed on other income it may derive in an income year, up to a maximum of either five per cent of its total income or $5 million, whichever is the lesser.

When a payment is made from the collecting society to the resale royalty right holder, this amount is generally included in the individual's assessable income. However if, for any reason, any part of this amount is or has been taxable in the hands of the collecting society, the amount to be included in the artist's assessable income is reduced to reflect this.

This streamlined treatment is analogous to that which already exists for copyright payments handled by copyright collecting societies.

The bill also makes several technical amendments to simplify the existing provisions in the tax law dealing with the treatment of copyright collecting societies. The operation of these provisions is not affected.

Finally, the bill also amends the definition in the tax law of a copyright collecting society to ensure that if such a body were appointed as the resale royalty collecting society, it would not lose its status as a copyright collecting society merely because of that fact.

Full details of the measures in this bill are contained in the explanatory memorandum.

Debate (on motion by Mr Billson) adjourned.