Problem
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:
• WPI will loan Lang $150,000, interest-free, to help finance a new house and reimburse her for 75% of her moving costs
Task
Prepare a brief report for Lang on the tax treatment for each of the items above.