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<h1>Accreted income tax applies when charitable trusts convert, merge with non eligible entities, or fail required asset transfers.</h1> Tax on accreted income is imposed to prevent misuse of charitable tax exemptions and arises where a trust is converted into a form ineligible for statutory registration or approval; where it is merged with an entity without similar charitable objectives and without registration or approval; or where on dissolution the trust does not transfer all assets to a registered or approved charitable institution within twelve months of dissolution.