Hi:  I believe you are right, that you don't charge GST on interest.  She should not have revised the original invoice to charge the interest.  That is a complete NO NO!!! You must tell your client to stop doing that!   In order to add interest he/she must prepare a NEW invoice for the amount of the interest only.   With no GST added.  Post that separate interest invoice in the current time period.   

Now that he/she has collected it, he/she should probably just remit it to the government.  However, hopefully this has not happened on very many customers as it is completely not right as you said.  It is particularly not right because of revising old invoices to add it in.  I shudder to think what horrors might have happened depending on the dates of the revised invoices.    Hopefully there has not been a "double recording" of the same revenue in two different time periods.  Not to mention that going back and changing invoices and the applicable GST amounts after the GST return has been filed creates immense headaches as well.    

She could also consider taking that GST out of the GST Charged on Sales account and refunding it to the customers, but that would also be a bit of a bookkeeping nightmare.      Rita