When The Company’s Own Words Outweighed The Ownership Chart

A founder’s trust structure said one thing. The company’s own disclosures said another (Homburg v. HMK)

Key Takeaways

1. Richard Homburg claimed a deduction that would have cut the tax on his $1.16 million stock option benefit in half. The CRA said his control and influence over the company meant Homburg was not entitled to the deduction.
2. How a business describes itself before a tax dispute matters. Homburg Invest Inc. was public, so its statements about control sat in securities filings. A private company makes the same kind of statements to its lenders, shareholders and auditors.
3. Homburg relied on the visible structure: the share ownership and the family trusts. The company’s own disclosures repeatedly identified him as indirectly controlling it, and Homburg’s case theory and evidence did not sufficiently explain the discrepancy.

The Situation

Richard Homburg was the Chairman, President and CEO of Homburg Invest Inc., a publicly traded real estate company. He received stock options from the company and later claimed a deduction that reduced approximately $1.16 million of stock option benefits by half.

The deduction was available only if Homburg dealt at arm’s length with Homburg Invest Inc. The CRA said he did not, arguing that Homburg exercised control and influence over the company. Homburg disagreed. He argued that two family trusts ultimately controlled the companies that owned Homburg Invest Inc., creating the necessary separation between him and the company. Homburg’s position rested on the company’s ownership structure, but ownership alone did not answer the control question.

The Tax Court preferred the CRA’s evidence and argument and dismissed Homburg’s appeal.

What Made the Difference

Homburg argued that the family trusts ultimately controlled Homburg Invest Inc., but the evidence was insufficient to support his position, and he could not meet the burden of proof for establishing control. The Court did not find that the trust structure could never work. It found that Homburg had not proved it did.

Instead, the Court looked at the relationship in practice. Homburg Invest Inc.’s own securities filings described Homburg as indirectly controlling its major shareholders and said its operations were influenced by the strategic course he envisaged. The Court treated those public statements as the most reliable evidence of his relationship with the company.

Homburg did not put those statements in context. He did not address the company’s corporate history in his own testimony and, in the Court’s words, “sidestepped” questions about it on cross-examination. The Court saw no basis to doubt what the filings said.

The Signal for Business Leaders

What a business says before a tax dispute can matter years later. Representations made to investors, lenders, regulators or tax authorities may become evidence in a later dispute, even if they were prepared for an entirely different purpose.

Statements like these rarely leave the record. What tends to matter is whether and how they are explained. An explanation placed in the record early, at audit or objection, shows what the statements were written for and what they did not mean. An explanation offered for the first time at trial reads as a response.

The ownership chart is the structure a business can see. What the business has represented to lenders, investors and regulators is the structure the CRA can point to. In Homburg, the second one carried the most weight. Which one carries more weight depends on how the case is built.

Case Reference: Homburg v. HMK, 2025 TCC 162.