(1) Subsection (3) applies if:
(a) an exempt entity is presently entitled to an amount of the income of a trust estate; and
(b) the exempt entity is not an exempt Australian government agency (within the meaning of the Income Tax Assessment Act 1997 ); and
(c) at the end of 2 months after the end of the relevant income year, the trustee has failed to notify the exempt entity in writing of the present entitlement.
(2) For the purposes of this section, treat the trustee as giving the exempt entity notice in writing of the present entitlement at a time to the extent that the trustee pays the exempt entity the amount of the present entitlement at that time.
(3) For the purposes of this Act, treat the exempt entity as not being presently entitled, and having never been presently entitled, to the amount mentioned in paragraph (1)(a) of the income of the trust estate, to the extent that the trustee failed to notify the exempt entity of that amount as mentioned in paragraph (1)(c).
(4) However, subsection (3) does not apply if the Commissioner decides that the failure mentioned in paragraph (1)(c) of the trustee should be disregarded.
(5) In making a decision under subsection (4) (or refusing to make such a decision), the Commissioner must have regard to the following:
(a) the circumstances that led to the failure mentioned in paragraph (1)(c);
(b) the extent to which the trustee has taken action to try to correct the failure and if so, how quickly that action was taken;
(c) whether this section has operated previously in relation to the trustee, and if so, the circumstances in which this occurred;
(d) any other matters that the Commissioner considers relevant.
(6) If subsection (3) applies, for the purposes of any application of section 99A in relation to the trust estate in relation to the relevant year of income, treat the trust estate as a resident trust estate.
(7) This section does not apply in relation to a trust estate that is a managed investment trust (within the meaning of the Income Tax Assessment Act 1997 ) in relation to a year of income.