By our reading, Canada does have a form for reporting interest and dividend income—one form for both (whereas in the U.S. we have a 1099-INT and 1099-DIV).
Have a look at the CRA's T5 Statement of Investment Income. It appears that the interest amounts paid as a result of the payroll errors— IF the interest amount is $50 or more—is reportable.
We are not Canadian tax experts nor attorneys, and we have sought to find an answer very quickly here. But the T5 is the form for reporting interest paid, and the threshold is $50.
On the CRA web site, see Chapter 4 - T5 slip, which identifies when you must prepare a T5, and when you do not (threshold, and certain kinds of interest payments).
We are making some assumptions here based on the information you provided, and the information we find on the CRA's web site. The section, "When you have to prepare a T5 slip," includes a couple of scenarios under which your interest payments might fall:
- "money loaned to or on deposit with ... a corporation, association, organization, or institution" OR...
- "an amount owing as compensation for expropriated property."
One or the other of these might apply to the interest in question in this situation.
You would do well to consult an attorney. In the U.S., a good rule of thumb is "when in doubt, report."
We were unsuccessful in getting through to a person at CRA to discuss.