"I don’t just prepare your taxes for you; I prepare you for your taxes."

As in most countries, the Canadian government gets its revenues from taxation in one form or another. Given all the taxes we pay either when we earn or when we spend, wouldn't you agree that controlling our taxes is very important?

Today, more than 48% of all government revenues are derived from personal income taxes.

Did you know that from April to August 2011, ,according to the Department of Finance, personal income taxes revenues increased 6.5 per cent ? Corporate taxes rose 6.7 per cent and non-resident tax revenues rose 6.5 per cent over the same period. How much did your revenues rise?

A considerable amount of your wealth is consumed in income taxes. If you have a job, in most cases, you are taxed even before you receive your pay cheque. Ouch!

And what about your investments or other sources of income? Yep, they are taxable as well, sometimes even though you haven't received the funds.

How best to deal with the situation? First we need to know where we are today and monitor changes on a continual basis. Where are you today? Are you being tax wise or tax foolish?

The importance of an assessment or tax analysis of your situation should never be over looked nor understated. This is an essential first step if you want to reduce your taxes.

Tax analysis plays a crucial part in assessing your tax exposure and provides a road map to avoiding or reducing your tax risks. Not only  will it help you to understand how to avoid the tax traps, you will gain valuable insights as to how to increase your income tax efficiently and protect your hard earned money from the tax man.

You will also be able to  more accurately predict or assess how much your tax bill will be before  the end of the year.

Ever stopped to think about how much taxes you are paying unnecessarily?

As a crucial part of the financial and tax planning process, tax analysis is concerned with

• Identifying or establishing tax objectives

• Identifying and evaluating risks associated with specific tax situations

• Evaluating the tax costs and benefits of suitable alternatives that address these tax risks

• Selecting appropriate strategies and implementing them and

• Monitoring the outcomes as part of the overall process.

The Anatomy of a Tax analysis

1. Assets and liabilities assessment
2. Income sources e.g. salaries, investment income, capital gains, business income, dividends etc.
3. Expenditures, these are either discretionary and non discretionary
4. Tax deferral vehicles and tax efficient investments
5. Levels of tax deductible debt
6. Types of investments
7. Risk management

In summary a tax analysis provides a roadmap for a tax payer to reduce taxes while she earns, reduce taxes while she spends and guides her to strategies to protect, preserve and increase investment income in a tax efficient manner.