diff --git a/registrasion/controllers/credit_note.py b/registrasion/controllers/credit_note.py
index 182c10e9..e4784c8b 100644
--- a/registrasion/controllers/credit_note.py
+++ b/registrasion/controllers/credit_note.py
@@ -1,3 +1,5 @@
+import datetime
+
 from django.db import transaction
 
 from registrasion.models import commerce
@@ -53,3 +55,27 @@ class CreditNoteController(ForId, object):
         inv.update_status()
 
     # TODO: Add administration fee generator.
+    @transaction.atomic
+    def cancellation_fee(self, percentage):
+        ''' Generates an invoice with a cancellation fee, and applies
+        credit to the invoice.
+
+        percentage (Decimal): The percentage of the credit note to turn into
+        a cancellation fee. Must be 0 <= percentage <= 100.
+        '''
+
+        from invoice import InvoiceController  # Circular imports bleh.
+
+        assert(percentage >= 0 and percentage <= 100)
+
+        cancellation_fee = self.credit_note.value * percentage / 100
+        due = datetime.timedelta(days=1)
+        item = [("Cancellation fee", cancellation_fee)]
+        invoice = InvoiceController.manual_invoice(
+            self.credit_note.invoice.user, due, item
+        )
+
+        if not invoice.is_paid:
+            self.apply_to_invoice(invoice)
+
+        return InvoiceController(invoice)
diff --git a/registrasion/tests/test_credit_note.py b/registrasion/tests/test_credit_note.py
index 2857ce7f..c4be1041 100644
--- a/registrasion/tests/test_credit_note.py
+++ b/registrasion/tests/test_credit_note.py
@@ -440,3 +440,28 @@ class CreditNoteTestCase(TestHelperMixin, RegistrationCartTestCase):
             # Generate invoice that should be automatically paid
             invoice2 = self._manual_invoice(1)
             self.assertTrue(invoice2.invoice.is_paid)
+
+    def test_cancellation_fee_is_applied(self):
+
+        invoice1 = self._manual_invoice(1)
+        invoice1.pay("Pay", invoice1.invoice.value)
+        invoice1.refund()
+
+        percentage = 15
+
+        cn = self._credit_note_for_invoice(invoice1.invoice)
+        canc = cn.cancellation_fee(15)
+
+        # Cancellation fee exceeds the amount for the invoice.
+        self.assertTrue(canc.invoice.is_paid)
+
+        # Cancellation fee is equal to 15% of credit note's value
+        self.assertEqual(
+            canc.invoice.value,
+            cn.credit_note.value * percentage / 100
+        )
+
+    def test_cancellation_fee_is_applied_when_another_invoice_is_unpaid(self):
+
+        extra_invoice = self._manual_invoice(23)
+        self.test_cancellation_fee_is_applied()