CRA indicates that a clause suspending the right of the life beneficiary to income on bankruptcy would not satisfy s. 73(1.01)(c)(ii)
One of the requirements to be a qualifying transferee described in s. 73(1.01)(c)(ii) regarding the s. 73(1) rollover is that the trust’s settlor "is entitled to receive all of the income of the trust that arises before the individual’s death.” CRA indicated that this condition would not be satisfied where the trust deed provided for the suspension of the individual’s right to demand distribution of the trust income in the event of the individual’s bankruptcy, even if this clause was never triggered.
Neal Armstrong. Summary of 30 March 2022 External T.I. 2017-0737181E5 F under s. 73(1.01)(c)(ii).