Mary Lang is a senior advertising executive with a large Winnipeg company. Lang is seriously considering an offer of employment from Westcoast Promotions Inc. (WPI), a large public company in Vancouver. Although housing costs are high in Vancouver, the climate and opportunities for career advancement would be better.

Mary has received a letter outlining a proposed remuneration package. The package is attractive but she is uncertain of the tax consequences. She has asked you to advise her.

In addition to an annual salary of $120,000, WPI has offered the following:

1. WPI will loan Lang $150,000, interest-free, to help finance a new house and reimburse her for 75% of her moving costs

2. Lang will be appointed a director of the companys American subsidiary in California; this will require her to travel to Los Angeles three times a year for board meetings. Lang will be paid a directors fee of $5,000 directly from the American company. Company policy permits spouses to take these trips as well. When a director takes his or her spouse, all travel expenses are paid for by the company.

3. A luxury automobile will be provided for her personal use, even though she will never require the car for business. The company will pay all of the operating costsapproximately $3,200 per yearas well as the monthly lease cost of $850. Lang will likely drive the car approximately 20,000 kilometres per year.

4. WPI will include Lang in its group term life insurance program and pay the premium, which provides coverage for $75,000. It will also pay the premiums for a private health plan, a dental plan, and a drug plan.

5. The company has a deferred profit-sharing plan, for which Lang will qualify.

6. Lang will be eligible for an annual bonus of up to $40,000, with the actual amount to be based on her productivity. The bonus will be awarded on November 30 of each year (the companys year-end) but will not be paid until May 31 of the following year.

7. WPI will provide Lang with a monthly allowance of $800 to cover any expenses she may incur. In addition, she will be reimbursed for travel costs to attend the annual advertising convention in Paris.

8. All WPI employees are entitled to participate in a stock-option plan. The option price is $12 per share; this price is guaranteed for three years and will then increase to $14 per share. Currently, the shares are trading at $12 per share; they are expected to rise significantly within two years. (Lang expects to exercise that option immediately rather than wait)

9. Lang will be provided with club memberships in the better social clubs in the area for relaxation purposes. She is not required to network on behalf of the company while at the club.

Required:

Prepare a brief report for Lang on the tax treatment for each of the items above.