Does financial hardship count as a valid reason for CRA to waive interest on a tax debt?

Yes, it can. Financial hardship is a valid ground CRA considers for interest relief under the Income Tax Act's taxpayer relief provisions, in appropriate circumstances. This means it's a real, recognized category, not something you'd need to fit into a different reason to be considered at all.

That said, this relief is assessed against your actual financial circumstances, not simply your assertion that paying would be difficult, and like other taxpayer relief requests, it's discretionary rather than a guaranteed outcome. CRA generally looks at your genuine ability to pay, considering your income, expenses, assets, and overall financial picture, so a request grounded in financial hardship tends to be stronger when it's backed by real documentation of your situation rather than a general statement that things are tight. Because the outcome depends on your specific circumstances and CRA's assessment of them, it's worth putting together a clear, honest, and well-supported picture of your finances if you're making this kind of request, rather than assuming financial hardship alone, without supporting detail, is enough to guarantee relief.