Section 35

Order of payment 

(1) When a taxpayer is liable to pay a penalty or a late payment interest in relation to a tax liability and the taxpayer makes a payment that is less than the total amount of tax, penalty and interest due, the amount paid shall be applied in the following order––

• (a) firstly in payment of the tax liability; 
• (b) secondly in payment of penalty; and 
• (c) finally the balance remaining shall be applied against any late payment interest. 

(2) When a taxpayer faces more than one tax liability at the time a payment is made, the payment shall be applied against the tax liabilities in the order in which the tax liabilities arose.

(3) Where the interest payable under this section accrues, the aggregate interest payable shall not exceed the principal tax liability.

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