Revenue Note for Guidance

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Revenue Note for Guidance

657A Taxation of Certain Farm Payments


Section 657A puts into effect certain changes providing for a particular tax treatment of certain farm payments which arise because of the temporary increase in farm incomes brought about by the decoupling of farm income supports in 2005.

This decoupling, which takes the form of a Single Farm Payment, payable annually in December of each year, replaces a whole variety of FEOGA payments schemes which farmers have received up until 2005. Typically these payments were made partly in the year to which they relate and partly in the following year.

In the year 2005, many farmers will have received income both under the old schemes and under the new scheme. In future years, only the single payment will apply. This measure provides all farmers with the opportunity to average these FEOGA payments, received in 2005 over 3 years.

Many farmers can already avail of farm income averaging under section 657 and, therefore, section 657A does not apply to them. However, for those categories of farmers, such as part-time farmers and farmers with spouses with off-farm income, that cannot avail of income averaging, this section works in the following way —

  • If a farmer elects for this treatment, any payments received in 2005 under any of the FEOGA schemes set out in the Table to the section which are chargeable for that year or for 2006 are treated as arising in 3 equal tranches, commencing in the the year in which it would otherwise be chargeable and in the following 2 years of assessment. This means that the burden of taxation is spread over 3 years instead of concentrated in the same year.
  • Once a farmer has elected for these arrangements, he or she cannot opt out until they run their course, unless that person ceases farming altogether, in which case the balance of any outstanding tax is collected in that year.

The election for this treatment is to be made on or before the tax return date for the year of assessment in which the payments would otherwise have been chargeable.


Section 657A comprises 6 subsections.

(1) Two definitions are set out for the purposes of this section.

Relevant individual” means a person who is farming in the year 2005 and who receives both a relevant payment AND a payment under the new Single Payment Scheme, both of which are charged to tax as farming income for the same year of assessment. Individuals who are already on income averaging under section 657 are excluded.

Relevant payment” means a payment received at any time in the calendar year 2005 under any of the schemes specified in the Table to the section.

(2) A relevant individual can elect that any relevant payments received by him/her will be subject to the income averaging arrangements. The election is to be in a form required by the Revenue Commissioners.

(3) Where an individual has elected under subsection (2), the relevant payment is deemed to have been received in 3 equal instalments, commencing in the year in which it would otherwise be chargeable and in the following 2 years of assessment, and taxed accordingly.

(4) Where a trade of farming has been permanently discontinued, then the payments, which have yet to be charged, are chargeable under Case IV of Schedule D for the year of the discontinuance.

(5) The election must be made on or before the normal return date for the year in which the payment is received and must be included with the normal return of income for that year.

(6) Other than the circumstances set out in subsection (4), once the election is made it cannot be unwound or altered.

The Table sets out the Farm Income Support Schemes to which this section applies.

Relevant Date: Finance Act 2021