Let flood victims dip into RRSPs without penalty, petition says

Hundreds of people have signed a petitiondemanding a change to the Income Tax Act to allow victims of natural disasters to use money from theirRegistered Retirement Savings Plan to rebuildwithout penalty.

"Amend the law governing RRSPs so that anyone who has experienced a natural disaster such as a tornado, fire, flood or earthquake can withdraw their RRSP without being subject to taxation, penalties or a maximum withdrawal amount, and that the repayment period shall be 15 to 20 years,"the petitioners wrote to theMinister of National Revenue.

By 8:30 a.m. Monday, 400people had signed the electronic petition on the House of Commons website, which was launched Feb. 6 byGatineauresidentSilvyLemayand sponsored byGatineauMP StevenMacKinnon.

Lemaytold Radio-Canada she's a flooding victim who felt she had no option but to use money from her RRSP on repairs to her home.

If a new law or policy comes into effect, she said she'd like it to be retroactive toearly May 2017,the peak ofthis past spring's severe flooding in Quebec and eastern Ontario.

MacKinnonsaidthe government should allow affected residents to dip into their retirement savings without penalties, similar to the first-time home buyers' tax credit.

"People have been left far too long in temporary accommodations, even hotel rooms, and most people just want to get on with the job. And that, for many people, means dipping into their personal resources and in many cases ... their retirement savings," he said, adding if people who have RRSPs are able to use them, it would free up other resources for those who don't.

'Genius idea'

Thomas Little welcomed the ideaandsigned the petition Monday morning. The Gatineauresident said he's already spent around $60,000 repairing his home that overlooks the GatineauRiver.

Last May, flood waters flowed over a three-metre seawall and another 1.5 metres of sandbags before overtaking his backyard and basement.

"That's their money. They own that money and if they could take the money out tax free, fix their house up, get back to normal and then slowly pay it back, that would be a genius idea," Little said.

He's received a little more than $30,000 from the Quebec government to help with repairs but recognizes it shouldn't be up to the government to front the full bill.

"I chose to live here. I don't feel the government should pay everything, but they should help. It's perfectly reasonable because I get to enjoy the river, I have to pay the price of the river."

Most from Quebec

The department that would be responsible for making changes to theIncome Tax Act, which includes RRSPs, is the Department of Finance, not the Minister of National Revenue.

The Minister of Finance's office toldRadio-Canada it did not want to comment before the petition was presented to the chamber.

More than 300 signees are from Quebec, andmost of the rest come from Ontario.

The petitionis open until June 6.

If itgets at least 500 signatures, the federal government must formally respond.

The right move?

If the law changes, it would set a precedentandthe implementation could be very complicated, said independent economist Jean-PierreAubry.

The definition of what constitutesa natural disaster is vague, he added, even though the petition statement states it may be a hurricane, fire, flood or earthquake.

"What kind of disaster is it? Will the next flood be big enough to say, 'Yes, we apply it,'or, 'No, we do not apply it'? It'svague," he said.

A better solution would be for the government to give a special grant to victims whennecessary, Aubrysuggested.