CRA states that the GST/HST gross negligence penalty can be collected on understated net tax resulting from reasonable mistake

After listing various factors that may be taken into account in determining whether to assess the 25% GST/HST gross negligence penalty, CRA stated that this percentage is generally applied to the difference between the correct net tax for the reporting period and the net tax calculated on the information in the return. CRA applies this literally, so that if the registrant understated its collectible tax by $1,000 due to gross negligence and by a further $99,000 due to a reasonable mistake, CRA would calculate the penalty as $25,000. (The wording of the ITA s. 163(2) penalty does not have this problem.)

Neal Armstrong. Summary of May 2016 Alberta CPA Roundtable, GST Q.5 under ETA s. 285.