It appears that the Australian art industry is feeling the first effects of changes in Australia's superannuation laws.
Under the changes self-managed super funds (SMSF) investing in collectables and personal use assets are subject to tighter rules as to how such collectables and personal use assets are stored and valued. In the context of the legislation, such collectables and personal use assets include artwork, jewellery, antiques, artefacts, coins or medallions, postage stamps or first day covers, rare folios, manuscripts or books, memorabilia, wine, cars, recreational boats, memberships of sporting or social clubs.
The new laws, which came into force on 1 July 2011, inter alia provide that:
- these items cannot be stored in the private residence of a related party of the fund;
- the fund must have written records in respect of decisions as to the storage of these items;
- these items must not be used by related party; and
- the transfer of an asset to a related party requires independent valuation.
"Sydney dealer Martin Browne last week forced the withdrawal of five works by Giles Alexander from Mossgreen’s Sydney sale of the contemporary collection of opera director John Wregg and his partner, artist manager Judith Alexander, on Sunday.
Browne did so by exercising Alexander’s copyright in images which had already made it into Mossgreen’s sale catalogue.
And he made the move because the Mossgreen estimates, which ranged from $500 to $3500, were “10 to 15 per cent” of the gallery prices set for the 37-year-old artist, who recently had his first show at London’s Fine Art Society, and whom he began to represent four months ago, he says.
“A low estimate gets people in, particularly if they are looking at the gallery prices,” says Browne, who had a number of artists – including McLean Edwards, Alexander Mc¬Kenzie and Tim Maguire – among Sunday’s 203 lots.
“Contemporary works should be held a minimum of 10 years, then sold judiciously, not just dumped on the market, at a loss in many cases.” ...
The sale in Sydney’s Queen Street, Woollahra, moved only about 60 per cent, on both volume and value, totalling $250,000, including buyers premium, against a pre-sale estimate of $330,000 (without). It also included eight unsold Susan Norries.
It follows the sale of 120 works from Melbourne Aboriginal dealer Bill Nuttall’s superannuation fund through Bonhams in May on estimates slashed to beat the anticipated rush as collectors moving to comply with the superannuation changes. “We are facing a potential tsunami of material being forced onto the market by the changes,” Browne says."It remains to be seen whether this prediction proves accurate.
Source: Australian Financial Review, 1 November 2012