Accreted income tax applies when charitable trusts convert, merge with non eligible entities, or fail required asset transfers. 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.