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.
The resale payment is a set percentage of the resale price. The art professional (for example, an auction house or gallery) resells the artwork and passes the payment to a collection agency. The collection agency passes the payment to the artist.
My income is not taxed before I get paid
Eligibility for the resale payment
Resale payments are administered by Manatū Taonga Ministry for Culture and Heritage. You can check your eligibility for the resale scheme and how to receive a payment on their website. The resale scheme begins on 1 December 2024.
Artist Resale Royalty Scheme | Manatū Taonga | Ministry for Culture & Heritage
Tax implications for artists
For an artist who was in business when their artwork first sold, a resale payment received for that art is taxable income, whether it comes from a resale made in New Zealand or overseas.
If you live:
- in New Zealand and your art is resold overseas, you must pay income tax in New Zealand on the resale payment
- overseas and your art is resold in New Zealand, you must pay income tax in New Zealand on the resale payment.
Overseas sales and double tax agreements
New Zealand has reciprocal resale payment agreements with Australia and the United Kingdom (UK). Artists living in those countries will receive the resale payment when their artwork is resold in New Zealand.
Artists living in New Zealand will receive a resale payment when their artwork is resold in Australia or the UK.
New Zealand has double tax agreements (DTAs) with many countries. DTAs can affect the incomes of New Zealanders who live overseas, or New Zealand residents who receive overseas income.
Important: we recommend that you ask a tax professional for advice.
Non-resident withholding tax
Non-resident withholding tax does not need to be paid on resale payments.
Deductible expenses
The collection agency may keep a percentage of the resale payment. If you are an artist in business, you can claim that percentage as a deductible expense when you tell us your income.
When an artist has died
When an artist dies, the resale payment goes to their estate. In this situation, the resale payment is a windfall gain, not taxable income. The artist’s estate will not need to pay income tax on the resale payment.
GST and the resale payment
The resale payment is exempt from GST when the art professional (for example an art dealer or gallery) passes it to the collection agency.
The collection agency does not need to pay GST on the percentage of the resale payment that it keeps.
The resale payment must include GST when the collection agency passes it to the artist, if the artist is registered for GST.