Under the Income Tax Act, Section 67.6, generally, fines or penalties are not tax-deductible, and unfortunately, this includes CRA fines and penalties (According to the CRA – Income Tax Folio S4-F2- C1, ‘Deductibility of Fines and Penalties’). There are a few narrow exceptions, for example, fines or penalties imposed before March 23, 2004.

Interest charged by the CRA is also not considered tax-deductible. (See, for example: In 2014, the Federal Tax Court followed the words of the Minister of Finance to interpret the Income Tax Act, Section 18, as denying the deduction of certain expenses when computing a taxpayer’s income from a business or property. This included a deduction in respect of any amount, including interest – payable under the Act. (Doulis v. The Queen, 2014 TCC 26)).

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