BREAKING NEWS – The Cooper Superannuation Review

BREAKING NEWS – THE COOPER SUPERANNUATION REVIEW AND ITS POSSIBLE IMPLICATIONS FOR THE ARTS INDUSTRY

An interim report by the Cooper Review has recommended that:

1. The acquisition of collectables and personal use assets by Self Managed Superannuation Funds be prohibited; and
2. That the Self-Managed Superannuation Funds which own collectables and personal use assets would be required to dispose of those over a ten year period.

Collectables include artworks, exotic cars, stamp collections, race horses, and wine cellars. However, it is the area of arts that is of great concern to us.

It is our view that if the recommendations of the Cooper Review are adopted by the Government, it would have very serious consequences for artists, as it would decrease the pool of funds available for the purchase of art, which we conservatively estimate to be in the vicinity of $50-60 million per annum.

This would not only have an effect on artists but would flow through to their exhibiting galleries and affect all associated business activities, such as framers, art suppliers, carriers, writers, reviewers, etc.

It is our intention to bring these concerns to the notice of the Government and the Opposition as well as the public.

We anticipate that we will be preparing petitions which will require your participation, and we therefore request that you provide us with your email address to facilitate this procedure ASAP.

In the meantime, please visit our website – www.australianartistsassociation.org.au – which we will keep updated regularly in order to keep you in the picture.

Tom Lowenstein

MEMBERS’ FUNCTIONS – MARCH – MAY 2010

MEMBERS’ FUNCTIONS – MARCH – MAY 2010

CHEZ OLIVIER DINNER

Over forty members of the Australian Artists Association gathered on Wednesday, 10 March 2010, for an informal dinner at Chez Olivier, 121 Greville Street, Prahran. It was a wonderful occasion for the members of the Association to reconnect with each other while sampling the delicious cuisine of Olivier’s French kitchen, washing it down with French wines.

The dinner was also an occasion to introduce to the members of the Association the owner of the restaurant, Olivier Normandin, an entrepreneur, wine connoisseur, and art philanthropist.

JOHN OLSEN LUNCHEON

We have also hosted a luncheon for John Olsen, who was recently in Melbourne for the official launch of The Olsen Hotel in South Yarra. The luncheon took place at the hotel’s BlueBottle restaurant, and was likewise a most entertaining get-together for the members of the Association and other artists.

BI-MONTHLY DINNERS

According to the feedback we have received, the above-mentioned events were enjoyable occasions, so we would like to endeavour to host such dinners or luncheons on a bi-monthly basis at a variety of locations.

In order to give each dinner certain individuality and focus, we would also endeavour to invite regular special dinner guests from other art organisations and associations, as well as visiting artists, curators, and philanthropists whenever an opportunity arises.

The next dinner will take place on Wednesday, 23 June 2010, at 7pm – time, place, and the guest speaker to be confirmed.

REGULAR DRINKS

A few years ago we started hosting regular drinks for the members of the Australian Artists Association at the Blue Diamond Bar in the CBD and Candy Bar in Prahran. Sadly, it did not prove to be as successful as we have hoped, and the numbers of the attendees have dwindled.

However, recently there has been a call to renew these regular informal gathering.

Our wonderful friends at the Art Series hotels have invited us to resurrect this tradition at the BlueBottle at The Olsen on the second Thursday of every month from 7pm onwards, starting from June 10^th. 

We realise that Thursdays are usually popular nights for exhibition openings – so join us at the BlueBottle once you’re “arted out” for a drink and chat with fellow members and other artists (or even dinner).

ANNUAL ORATION & COCKTAIL PARTY

After a certain hiatus, we will be resuming our annual gala events. In the past, these were high-profile dinners or luncheons, at which the presentations of the Painters and Sculptors’ Association Medals were made to some of Australia’s most significant artists, who the Executive felt were deserving of the honour. Past recipients included Roger Kemp, Lloyd Rees, Margaret Olley, John Olsen, John Coburn, Charles Blackman, Judy Cassab, Robert Juniper, Arthur Boyd, and Louis Kahan.

At the last Board meeting of the Australian Artists Association, the Board members discussed the need to continue these popular and high profile events, though with a different format. It has been suggested that a cocktail style event with a guest orator would be more suitable for our revamped organisation.

INSURE YOUR ARTWORKS WITH CIA (CONSOLIDATED INSURANCE AGENCIES)

INSURE YOUR ARTWORKS WITH CIA (CONSOLIDATED INSURANCE AGENCIES)

We are pleased to recommend our members the services of CIA (Consolidated Insurance Agencies). CIA are specialist providers of Fine Arts Insurance. Their facility provides cover for museums, galleries, fine art dealers, exhibitions, private and corporate collections, artists’ personal collections, etc.

There is a standard cover against fire, storm, accidental and malicious damage, burglary, and theft. Most importantly for our members, the cover also extends to include artworks in transit locally and worldwide; fairs and exhibitions; in transit to, from, and while attending fairs and exhibitions, etc.

To obtain a no-obligation quotation, contact Geoff on +613 9557 2976 or geoff@ciainsurance.com.au. Alternatively, you can download the information brochure from their website, http://www.ciainsurance.com.au/fine-arts.php.

MEMBERS’ BENEFITS: EIGHT HOTELS AUSTRALIA

MEMBERS’ BENEFITS:  EIGHT HOTELS AUSTRALIA

Eight Hotels Australia, which was formed in 2002, is an eclectic collection of independently named boutique hotels. They are committed to developing and operating boutique hotels in prime locations throughout Australia whilst integrating striking interior design and world class hospitality.

We are pleased to announce that Eight Hotels Australia is offering our members special accommodation rates across a range of their hotels in Sydney, Canberra, and Brisbane:

Diamant Hotel, Sydney……. from $ 157.00

Kirketon Hotel, Sydney……… from $ 132.00

Diamant Hotel, Canberra… from $ 176.00

Limes Hotel, Brisbane……… from $ 199.00

To take advantage of these great rates, mention “Australian Artists Association” when booking your accommodation at any of the hotels listed above. For contact details and further information on Eight Hotels Australia, visit their website, www.eighthotels.com.

MAJOR SPONSORSHIP ANNOUNCEMENT: ART SERIES HOTELS

MAJOR SPONSORSHIP ANNOUNCEMENT: ART SERIES HOTELS

We are pleased to announce that the Australian Artists Association has secured a major sponsorship from the Art Series Hotels and its parent company, Asian Pacific Building Corporation.

In addition to this, as a member of the Australian Artists Association, you can now enjoy 15% discount off accommodation rates at any Art Series hotels – The Cullen on Commercial Road, Prahran, as well as The Olsen on Chapel Street, South Yarra, or The Blackman which opens its doors in August on St Kilda Road, Melbourne – by booking your accommodation through the dedicated members’ only area on the Art Series hotels website – www.artserieshotels.com.au/aaa.

ABOUT ART SERIES HOTELS:

Art Series hotels provide guests with a unique experience. Each hotel is named after and inspired by famous Australian artists. No two Art Series hotels are the same.  The first to open was The Cullen in November 2009. This $48 million dollar boutique hotel in Prahran is named after the artist Adam Cullen. Home to 115 rooms over six levels, it boasts stunning views from rooftop penthouses, and includes two restaurants and a hair salon.

The flagship property is The Olsen ($90million), which was officially launched in April 2010. Named after one of Australia’s most celebrated living artists, John Olsen, it is set within Melbourne’s premier shopping hub, Chapel Street. The 14-story building, designed by architects Rothelowman, features a draped canvas like façade, which encloses 229 refined rooms, a day spa, two restaurants, and a glass bottomed swimming pool overhanging Chapel Street.

Every hotel features a major artwork commissioned especially for the hotel foyer from the naming artist, including Adam Cullen’s Ned Kelly Series in the foyer of The Cullen, and six metre mural, Golden Sun over the Yarra River, set in the spectacular glass foyer of The Olsen. Archival prints and a photographic history of the artist’s life adorn walls of rooms and public spaces of the hotels, while the architecture, interior design and style personify and reflect each individual artist.

For contact details and further information on the Art Series hotels, visit their website, www.artserieshotels.com.au

Advice regarding Wills and Estates

SOME ADVICE FROM TOM LOWENSTEIN REGARDING WILLS AND ESTATES

Over the past few years, I have been confronted with numerous problems in my capacity as Executor, mediator, and / or advisor to Deceased Estates. Many of the problems that occurred arose from homemade Wills, and sometime from Wills prepared by lawyers. In some instances, it was impossible to carry out the wishes of the Deceased due to technical / legal reasons or as a result of lawyers who had not been properly briefed by the accountants as to the financial situation of the client. In other instances, problems arose when properties left to beneficiaries were not actually owned by the Deceased but instead belonged to a company or a Trust. There were also some situations where the assets left in the Will no longer existed, or had already been gifted during the Deceased’s lifetime.

When preparing a Will the most important aspect is that both your accountant and your solicitor are consulted and are fully aware of your assets and their location. In the first instance you should consult your accountant and obtain a comprehensive list of your assets and liabilities, including the date that the assets were acquired, as there could be possible Capital Gains Tax implication. You should also ask your accountant to prepare a chart of your business structure and to provide your solicitor with copies of Trust Deeds and company documentation, to establish in what way the control of these entities is exercised.

It is also necessary for you to prepare a comprehensive list of your beneficiaries, including children by previous marriages or others who could claim to be your dependents. Ideally, you should meet with your accountant and solicitor as a part of the preliminary discussion to ensure that they communicate with each other and are fully informed of your circumstances.

In case of artists where a large part of their estate is in the form of artworks, special considerations are needed.

If you would like to find out more regarding the financial implications of making a Will and Estate planning, contact us for further information regarding this article.

Integrity Measures Rulings of 2000 and 2005

EXTRACT OF TOM LOWENSTEIN’S RECENT SUBMISSION TO THE MINISTER FOR THE ARTS REGARDING THE “INTEGRITY MEASURES” RULINGS OF 2000 AND 2005 AFFECTING THE VISUAL ARTS SECTOR

In my capacity of Executive Director of the Australian Artists Association, I am making a submission regarding the “Integrity Measures” rulings of 2000 and 2005, which affect the Visual Arts Sector.

In brief, in June 2000, the Government introduced “integrity measures” [regarding losses from non-commercial activities] which are having serious consequences for some artists. This legislation precluded artists from claiming losses from such business activities, unless they met one of four criteria: assessable income had to exceed $20,000; a profit had to be made in 3 out of 5 years; assets utilized in the business have to exceed $100,000; utilized real estate had to exceed $500,000.

Subsequent amendments enabled artists with income from other sources of less than $40,000 to offset their art business losses against this other income.

In 2005 a further ruling was issued by the Australian Taxation Office, which set the criteria to define whether an artist is “carrying on a business as a professional artist.”

It seems a travesty of justice, if an artist meets the criteria to determine that he or she is carrying on business as a professional artist, that these artists have then to meet the additional criteria mentioned above.

There is no justification in putting additional conditions on artists’ ability to claim legitimate business expenses, once they have established that they are carrying on business, as a professional artist.

The Legislation has the effect of penalizing the artists for their lack of financial success, which, I am sure, is not the intention of the legislators. The current economic situation can only add to the difficulties experienced by the artists.

Read the full submission on www.lowensteinsarts.com.au

Trust Accounts for the Galleries

EXTRACTS OF TOM LOWENSTEIN’S RECENT SUBMISSION TO THE AUSTRALIAN COMPETITION AND CONSUMER COMMISSION (ACCC) AND THE VICTORIAN MINISTER FOR THE ARTS REGARDING TRUST ACCOUNTS FOR THE GALLERIES

In the early 1990s, the art market was quite depressed, and sales dropped dramatically, with the result that some galleries had to close their doors, owing artists substantial monies. There is a general concern that with the current downturn of the economy, there is a danger of the repeat closure of commercial galleries. In many cases artists will be the ones who will suffer most.

Furthermore, we are constantly aware of certain galleries (and let me stress that these cases are exceptional) who do not pay their artists promptly; in a few cases, legal action had to be taken to recoup the sales proceeds.

There is no legal, moral, or financial justification for galleries using artists’ monies, without the artist’s consent, as their working capital.

The only way in which to ensure that the present gallery system is not used to the disadvantage of artists, is for galleries to operate Trust Accounts for their artists, similar to Solicitors and Estate Agents Trust Accounts.

It is my recommendation that Legislation should be introduced, whereby when a Gallery receives payment for sale of an artist’s work, the proceeds will be placed into a Trust Account and payments then made from the Trust Account for the artist’s share of the sale, and to the Gallery for their commission.

A number of commercial galleries and the Australian Commercial Galleries Association have opposed this concept, and it is unlikely that the ACGA will self-regulate and set up Trust accounts without some form of Government intervention.

Read the full submission on www.lowensteinsarts.com.au

FINANCIAL CRISIS AND THE VISUAL ARTS IN AUSTRALIA

EXTRACTS FROM TOM LOWENSTEIN’S ARTICLE REGARDING THE FINANCIAL CRISIS AND THE VISUAL ARTS IN AUSTRALIA

THE PRIMARY MARKET

Over the past decade the primary art market has experienced a healthy growth. To date, the impact of the recession on the primary market has been limited and in no sense has this market collapsed. Generally good art by recognized artists has continued to sell well in Melbourne, Sydney, Brisbane, and Canberra. The less well established artists have had some difficulty in achieving sales over say $10,000, although sales of smaller paintings, works on paper, and graphics have experienced a modest growth.

THE SECONDARY MARKET

It will be interesting to see the first round of auctions in the next few months. In the second half of last year, auction houses had been showing signs of strain. In part, this was due to the lack of high quality stocks to maintain the frequency of more than 30 major art auctions per year.

GENERAL TRENDS

Over the last couple of decades, there has been a marked shift from the “art collector” to the “art investor” / “art speculator”. It is without a doubt that auction houses and secondary art market consultants have been instrumental in promoting art as an alternative investment.

This has been to a large extent assisted by the Australian Taxation Office’s recognition of art as a legitimate form of investment and its acceptance that even a certain percentage of a superannuation fund can be invested in art (subjects to prudent conditions and guidelines).

It is considered, that the economic downturn will affect the secondary art market to a larger extent than the primary art market. While it is expected that collectors and investors will continue buying good art at reasonable prices, speculators will be reluctant to return to the fray.

Without a doubt, artists, like the general community, will all experience and feel the impact of this financial downturn. However, in most instances, the impact can be managed, and the negative consequences can be minimized.

SUGGESTED STRATEGIES

1. It is suggested that artists consult their accountants or financial advisors to put in place contingency plans for, say, next two years. It is suggested these advisors be instructed to prepare a budget for expenditure. In many instances, the difference between anticipated income and budgeted expenditure will create deficiency. We suggest that artists, who do not have reserves to cover this deficiency, but have equity in their property (or some other security), approach their bank to provide a facility to cover this deficiency. We do not suggest that artists actually borrow the money, but that they arrange for their banks to put a facility in place, in case it is needed. In these circumstances (with the exception of the facility fee) interest is only paid on the overdraft.
2. Recent observations from exhibitions and reports from galleries and artists suggest that with the exception of some well-established artists, sales in excess of $10,000 for individual works are becoming more difficult to achieve. However, more sales have been achieved in the lower price bracket. When planning an exhibition, an artist could give a consideration to include a number of smaller items (including works on paper and / or graphics) to complement larger / major pieces.
3. It is essential for artists to continue their dialogue and relationship with their commercial art galleries. Artists should avoid the temptation to by-pass their dealers and resort to studio sales. This can have negative consequences and impact the artist’s prices for many years in the future.

CONCLUSION

While it may sound like a euphemism, not to view the recession as a crisis, but as an opportunity, this could provide artists with a bit of time to reassess their work and their direction, and to embark on new projects, which could come to fruition when the fiscal situation improves.

Read the full article on www.lowensteinsarts.com.au

Welcome to Our Blog

The Australian Artists Association (AAA) was formed in 1984. 2009 marks our twenty fifth anniversary! In contrast with our early period of focused politicking, the past few years have been relatively quiet for the organisation and we have kept a low profile. However, rumbles of change are afoot!

As you may recall the AAA was originally established as a lobby group representing the needs of professional artists. Our initial challenges included lobbying the Minister for the Arts in relation to artists donating artworks and working closely with the National Association for the Visual Arts (NAVA) and Arts Law on submissions to Government and the Tax Office. Our efforts spanned subjects such as the GST, the PAYG system, losses from non commercial activities as well as the unique nature of carrying on business as an artist.

In addition to our lobbying role we have also assumed the role of a peer group body, paying tribute to a number of artists for their outstanding contribution to the arts by awarding specially designed medallions at a series of celebratory presentation events (past awardees are: Roger Kemp, Lloyd Rees, Margaret Olley, John Olsen, John Coburn, Charles Blackman, Judy Casaab, Robert Juniper, Arthur Boyd and Louis Kahan). Feedback tells us that such social events are popular and regarded as an important catalyst for the creative community as well as valuable public exposure for the AAA membership.

Over recent months the AAA Board met and discussed directions for the organisation, seeking ways to revitalise and update the relevance of membership.

Plans for the future include the following:

• a seasonal quarterly members’ newsletter
• a program of regular social functions in Sydney and Melbourne, including the ‘Medal Presentation dinner’
• a range of special AAA members discounts on travel, accommodation, arts supplies, gallery bookshops, and insurance
• venues for regular informal drinks/chats

We are keen to hear from our members and value your input into AAA’s future directions, so please email us atinfo@australianartistsassociation.org.au and feel free to air your ideas with us.

For your convenience, you can download an annual member’s application form from this page – and we hope that you will sign up and join us for an exciting year ahead.

With warm regards
Tom Lowenstein
Executive Director
AAA