CRA indicates that a gross negligence penalty generally should not apply to a genuine misinterpretation of the ETA

Respecting whether the ETA gross negligence applied where there has been a failure to report taxable revenue, CRA indicated that “Usually, gross negligence penalties are not assessed where it is considered that there was a genuine misinterpretation of the ETA on the part of the registrant and it is reasonable to assume that the registrant did not know whether a particular supply was a taxable supply” and that “Generally speaking, no penalty will be assessed where it appears that the registrant was confused about the reporting of an amount and it is the first time a penalty is being considered.”

Neal Armstrong. Summary of May 2019 CPA Alberta CRA Roundtable, GST Session – Q.7 under ETA s. 285.