1

Start with the step 1 amount worked out under section 705‑65, which is about the cost of ^* membership interests in the joining entity held by ^* members of the joined group

To ensure that the allocable cost amount includes the cost of ^* acquiring the membership interests

2

Add to the result of step 1 the step 2 amount worked out under section 705‑70, which is about the value of the joining entity’s liabilities

To ensure that the joining entity’s liabilities at the joining time, which are part of the joined group’s cost of acquiring the joining entity, are reflected in the allocable cost amount

3

Add to the result of step 2 the step 3 amount worked out under section 705‑90, which is about undistributed, frankable profits accruing to the joined group before the joining time

To increase the allocable cost amount to reflect the undistributed, taxed profits and so prevent double taxation

4

Subtract from the result of step 3 the step 4 amount worked out under section 705‑95, which is about pre‑joining time distributions out of certain profits

To prevent the allocable cost amount reflecting return of part of the amount paid to ^* acquire the ^* membership interests in the joining entity

5

Subtract from the result of step 4 the step 5 amount worked out under section 705‑100, which is about certain losses accruing to the joined group before the joining time

To prevent:

(a) a double benefit arising from the losses; and

(b) losses that cannot be transferred to the ^* head company, or are cancelled by the head company, under Subdivision 707‑A being reinstated in an unrealised form or reducing unrealised gains.

6

Subtract from the result of step 5 the step 6 amount worked out under section 705‑110, which is about losses that the joining entity transferred to the ^* head company under Subdivision 707‑A

To stop the joined group getting benefits both through higher ^* tax cost setting amounts for the joining entity’s assets and through losses transferred to the head company

7

Subtract from the result of step 6 the step 7 amount worked out under section 705‑115, which is about certain deductions to which the ^* head company is entitled

To stop the joined group getting benefits both through the ^* tax cost of the joining entity’s assets being set and through certain tax deductions of the joining entity being inherited by the head company

8

If the remaining amount is positive, it is the joined group’s allocable cost amount. Otherwise the joined group’s allocable cost amount is nil.