16 January 2003 Internal T.I. 2002-0177807 - GST PENALTIES&INTEREST DEDUCTIBILITY -- summary under Income-Producing Purpose

Although whether penalties and interest assessed under the Excise Tax Act are deductible is a question of fact, they generally will be deductible. Whether or not a penalty for gross negligence opposed under s. 285 of the Excise Tax Act is a breach that is so "egregious" or "repulsive" as to be non-deductible would have to be determined on the facts of each particular case.