A FULL GUIDE TO CALCULATE YOUR ZAKAT
islamicrelief.ca/zakat • 1-855-377-4673 SECTION 1 | UNDERSTANDING ZAK AT
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ISL AMIC RELIEF CANADA | ZAK AT CALCUL ATOR
OUR APPROACH We strive to ensure that your Zakat empowers the individuals and families who receive it, and ultimately contributes to bringing them out of the difficult circumstances they are in. Through careful assessment, we take special care to reach those who are most at risk. They receive your Zakat in the form of medicines, education materials, food supplies, nutritional supplements, hygiene kits, water distributions, shelter kits, sustainable income and emergency relief. Throughout it all, we work to ensure your Zakat donations are not just a simple transaction, but rather a means to uplift and transform.
SECTION 1 | UNDERSTANDING ZAK AT
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UNDERSTANDING ZAKAT What is Zakat? Zakat is a charitable donation that Muslims calculate and pay every year as a percentage of 2.5% on their surplus wealth. It is not just a fundamental pillar of Islam – it is also a revolutionary concept with the potential to ease the suffering of millions around the world.
ZAKAT IN THE QURAN
“Those who put aside from their wealth a known right for the needy and the poor …they are honoured in Gardens of Bliss.” – Quran 70:24-35
Zakat is a means for us to draw closer to Allah’s pleasure and build towards our afterlife. It is a clear right that the poor and disadvantaged have over us, and an opportunity for us to fulfill our global responsibility to care for those who are most vulnerable.
Who pays Zakat?
MUSLIM ADULT
Zakat is an obligation upon any Muslim who has reached puberty, is of sound mind, and owns the minimum amount of Zakatable wealth (Nisab) for at least one lunar year. If these conditions are not met, Zakat is not obligatory on you.
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What is Zakat payable on? Zakat is only due on wealth that:
Meets the minimum threshold of Nisab
You have owned for one lunar year
You have complete ownership over
What is Nisab? Nisab is the minimum amount of wealth that acts as a threshold to determine whether Zakat is obligatory on you. In Islamic Law, there are two ways to calculate Nisab:
GOLD
SILVER
The Nisab by the gold standard is 3 ounces of gold (87.48 grams) or its equivalent in cash. You can calculate this online, by multiplying the number of grams by the current market value of gold.
The Nisab by the silver standard is 21 ounces of silver (612.36 grams) or its equivalent in cash. You can calculate this online, by multiplying the number of grams by the current market value of silver.
Wondering which Nisab threshold you should use, gold or silver? In the Hanafi school of thought, the silver standard is predominantly used to ascertain the Nisab threshold and eligibility to pay Zakat. However, there are contemporary scholars within the Hanafi school who recommend using the gold standard, especially in today’s age where the cost of living is high and the value of silver has significantly decreased. The other schools of thought use the value of gold. You can choose to use the silver standard if you would like to increase the amount of charity distributed. SECTION 1 | UNDERSTANDING ZAK AT
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Who receives Zakat? The Quran (9:60) specifies eight categories of people who qualify to receive Zakat:
THE POOR
THE NEEDY
ZAKAT ADMINISTRATORS
THOSE WHOSE HEARTS ARE TO BE RECONCILED
THOSE IN SLAVERY
THE DEBT-RIDDEN
IN THE WAY OF ALLAH
THE DESTITUTE TRAVELLER
Islamic Relief distributes your Zakat amongst the needy and poor. A poor person is someone whose property, in excess of their basic requirements, does not reach the Nisab threshold.
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When is Zakat paid? Zakat is due as soon as one lunar year (354 days) passes from the date you become an owner of Nisab. If you cannot remember the exact date, an estimated date can be used. If your wealth decreases during the year, but comes back up to Nisab at the one lunar year mark, Zakat is still due upon your net wealth, despite the fluctuation. Zakat should be paid immediately as soon as it is due. If you generally own Nisab every year, it can be helpful to set a certain date in the Islamic lunar calendar, and adhere to calculating and paying Zakat on this date every year.
Can Zakat be paid in instalments or in advance? You can pay your Zakat in advance of the due date, as long as you are confident that your wealth will remain stable. It is also permissible to pay the Zakat due in instalments, although it is preferred to have it paid in one single transaction.
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HOW TO CALCULATE ZAKAT As you begin to calculate your Zakat, we pray that Allah accepts your intention and act of worship. Just as your Zakat will bring ease to so many in need, we pray the blessing from this act is a continuous source of ease in your life, family and wealth ameen. Our calculator below will allow you to easily calculate your Zakat payment in 3 steps. You can also visit islamicrelief.ca/zakat to make your calculation online.
STEP
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Calculating your Zakatable assets • Cash • Gold & Silver • Debts owed to you • Investement properties & fixed assets
STEP
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• Pension funds, retirement savings, tax-free savings • Business assets
Calculating your liabilities to deduct • Personal & living expenses • Debts you owe • Business expenses
STEP
• Shares, stocks, & investments
Calculating your Zakat payment
ISL AMIC RELIEF CANADA | ZAK AT CALCUL ATOR
Step 1 Your Zakatable Assets Cash All cash you own is subject to Zakat, whether in your bank accounts, in another currency or stored with another person. My total cash amount is
$
Gold & Silver Gold and silver that you own in any form is subject to Zakat according to its weight value. This includes any jewelry, coins, ornaments, etc. made of gold or silver. Gold and silver can be valued by its weight and resale value by a jeweler or you can multiply the number of grams (of gold or silver) that you own by the current market value. There is a difference of scholarly opinion regarding jewelry. The Hanafi school of thought maintains that Zakat should be paid on gold and silver jewelry regardless of whether it is used or not. The other schools of thought maintain that Zakat is not payable on jewelry that is kept for personal use. If it kept with the intention of selling it later on, or as a good investment, then Zakat is due on it every year. For personal use items made from a mixture of metals, these are only subject to Zakat if half or more of the metal is gold or silver, although some scholars hold that the proportion of gold or silver in any owned asset is subject to Zakat. Precious gems and other metals are not subject to Zakat.
Total grams of gold I own is
g
valued at a total of
$
Total grams of silver I own is
g
valued at a total of
$
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Debts Owed to You Zakat is payable on money owed to you that you are confident will be returned back to you, such as personal loans to friends and family. This does not include outstanding wages, unpaid dowry, inheritance that is not in your possession or assets held in trust. Total value of debts owed to me is
$
Investment Property & Fixed Assets For property other than your home, which is purchased for long-term investment without intention to resell, then Zakat is due on saved rental income only. In the case that it is a rental property then you only have to pay Zakat on the rental income minus the expenses related to the rental income. For property with the prime motivation of capital appreciation and with the intention to resell in this Zakat year, then include the total market value of the property. Your personal property and fixed assets are not subject to Zakat. Total value of my Zakatable property and fixed assets is
$
Shares, Stocks & Investments For halal-compliant shares that are purchased for long-term investment to generate dividends, without intention to resell, then only the dividend income is added to your Zakatable assets. If halal-compliant shares are purchased for capital appreciation with the intention to resell, in the case of day trading or short term trading, then the total of their market value is added to your Zakatable assets. If you are cashing out halal-compliant shares, the amount remaining after taxes and fees, is added to your Zakatable assets. Total value of the Zakatable portion of my shares is
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ISL AMIC RELIEF CANADA | ZAK AT CALCUL ATOR
$
Pension Funds, Retirement Savings, Tax-Free Savings Since retirement plans and funds are owned assets or cash, they are subject to Zakat depending on the nature of the fund. If you have access to withdraw funds, then first calculate the total fund value minus the Penalties and Taxes you will pay for early withdrawal, then add this value to your Zakatable assets. If it is a long term fund and you do not have access or control to withdraw, then you may treat it as a passive investment and only pay Zakat upon maturity when you have access to your investment. Zakat will be payable on the entire value of the fund less any fees or taxes. Total value of the Zakatable portion of my saving funds is
$
Business Assets According to the percentage that you own of the business, add the following to your Zakatable assets: cash, the wholesale price of all assets that were purchased for resale, finished goods, work in progress, the cost of raw materials, and any money owed to the business that is likely to be received. For business assets that were sold, the income generated from the sale is added to your Zakatable assets. Total cash amount is
$
Total value of inventory is
$
Total value of work in progress and raw materials is
$
Total value of accounts receivables that will be collected
$
My Total Zakatable Assets are
$
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Step 2 Your Liabilities Personal & Living Expenses You may deduct your expenses for the upcoming month from your Zakatable assets, including outstanding or overdue living expenses, such as rent payments, utility bills, food, and other bills. Total of my personal expenses add up to
$
Debts You Owe You may deduct debts that you owe from your Zakatable assets. For long-term debt, such as mortgages or student loans, only the non-interest or principal portion of the upcoming lunar year’s worth of payments can be deducted for Zakat calculation purposes. Some scholars maintain that it is best for only the next payment to be deducted. If payments are not being paid on the long-term debt, then it should not be deducted from your Zakatable assets. Total of my personal debts add up to
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$
ISL AMIC RELIEF CANADA | ZAK AT CALCUL ATOR
Business Expenses You may deduct business expenses from your Zakatable assets, including rent, bills, salaries, even if they are outstanding or overdue. You may also deduct outstanding short term commercial loans. For long term business debt, deduct only the next year’s non-interest portion. Short term is considered anything less than one lunar year, and long term is considered more than one lunar year. For goods purchased on credit, deduct the total value of the goods. Total of my business expenses add up to
$
Total of my business short term debts add up to
$
Next year’s non-interest portion of my long term debts add up to
$
Total value of goods purchased on credit adds up to
$
My Total Liabilities are
$
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Step 3 Your Zakat Payment My Zakatable wealth is
$ Assets
-
$ Liabilities
=
$ Zakatable Wealth
Nisab SILVER 612.36 grams =
$
GOLD 87.48 grams =
$
My Zakatable payment is
You only owe Zakat if your net Zakatable wealth is more than Nisab.
$ Zakatable Wealth
x
0.025
$ ZAKAT PAYMENT 12
ISL AMIC RELIEF CANADA | ZAK AT CALCUL ATOR
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SERVICES TO HELP YOU
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We understand that calculating Zakat can be complicated sometimes, and you might have more questions. We will do our best to answer your questions and direct you to the right resources! For personalized advice and answers, we always recommend consulting with a local scholar.
Call us 1-855-377-4673 Monday - Friday 9am - 5pm EST Speak to our team if you have questions, or if you would like to split up your Zakat payment for multiple causes, automate your Zakat donations, or even fund a specific project. We can help, just give us a call.
Email us info@islamicrelief.ca Receive a quick response to your questions or requests from our team. Visit us online islamicrelief.ca/zakat We encourage you to visit our online Zakat Resources page for helpful materials to find what you’re looking for.
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FOLLOW YOUR DONATION OUR DISTRIBUTION PROCE SS
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Beneficiary Islamic Relief identifies those who are well below Nisab, working with the poorest of the poor and those who are most vulnerable in the face of conflict and disaster. This includes orphan households, single female-headed households, people with disabilities, and the elderly.
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Needs Assessment Our case workers, staff and volunteers in our field offices around the world are trained to do a careful needs assessment of each beneficiary. Our teams use a standardized system to collect information, record notes and categorize, to determine if the individual or family is Zakat eligible.
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Project Proposal Based on the recommendations of the field office for the needs of our beneficiaries, a project proposal is put together in accordance to the principles of distributing Zakat, and then submitted to Islamic Relief Worldwide to request funding by various Islamic Relief offices, including Islamic Relief Canada.
ISL AMIC RELIEF CANADA | ZAK AT CALCUL ATOR
With your support, we strive to fulfill our global responsibility to care for those who are most vulnerable.
4 Zakat Collections Throughout the year, and especially in Ramadan, Islamic Relief Canada collects Zakat donations to continuously fund projects that assist the poorest of the poor.
5 Sending Funds Once Zakat funds are collected, Islamic Relief Canada allocates funds to those project proposals to put your donations into action. We wire the money to Islamic Relief Worldwide, which disburses it to the field offices for immediate implementation.
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Your Donation in Action Your Zakat is distributed through health projects by providing medical treatment and drugs; through education projects by providing materials, uniforms and food for orphans; through food distributions and nutritional supplements; through water trucking in areas of drought and hygiene kits; through livelihood projects by providing agriculture supplies or livestock for families to make an income; and through emergency relief by providing urgent food supplies, shelter kits and living essentials.
7 Your Impact Once our beneficiaries receive your Zakat donations, our work is not over with them. As long as they are needy, they remain in our system to receive support every time there are more funds or other projects being implemented.
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QUICK FACTS & FAQ What is your Admin cost?
Do you assist Muslims only?
Our admin cost is only 10%.
We follow strict guidelines of the Zakat policy, using Zakat donations to help Muslims with their immediate needs. All other donations help anyone in need, regardless of religion or race.
Is Islamic Relief Canada a registered charity? Yes we are a registered charity with the CRA. Our charity number is 821896875RR0001.
Which countries do you help in? We are a national organization, with the ability to help Muslims all over the world. We work in over 40 countries worldwide, and fund many organizations here in Canada to amplify their Zakat efforts.
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How much money have you distributed? In 2019, we have spent over $12.5 million of Zakat funds to help those in need.
ISL AMIC RELIEF CANADA | ZAK AT CALCUL ATOR
SECTION 1 | UNDERSTANDING ZAK AT
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This booklet is designed to help you learn more about Zakat, equip you with a step-by-step guide on how to calculate your Zakat, and show you the impact of your Zakat donation when you give it with Islamic Relief Canada. We encourage you to visit our online Zakat Resources page for additional materials or to use our online Zakat calculator.
ZAKAT RESOURCES iPhone: Scan using Camera Android: Scan with Google Lens
3501 Mainway Burlington, ON L7M 1A9 www.islamicrelief.ca 1-855-377-4673 (HOPE) Registered Charity No. 821896875RR0001
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ISL AMIC RELIEF CANADA | ZAK AT CALCUL ATOR