A FULL GUIDE TO CALCULATE YOUR ZAKAT
islamicrelief.ca/zakat • 1-855-377-4673
We strive to ensure your Zakat donations are not just a simple transaction but rather a means to uplift and transform, bringing those who receive it out of the difficult circumstances they are in.
Our Commitments for Your Zakat Increase Accountability and Transparency: Documented processes to ensure financial transparency and the distribution and impact of Zakat funds are compliant with Islamic principles.
Zakat Advisory Board: Regular meetings to oversee implementation, changes, and consult with scholars.
Create More Zakat Eligible and Funded Projects: Work alongside implementing partners to develop more Zakat eligible and funded projects.
Frequent Monitoring and Reporting: Regular internal project reporting and stewardship touchpoints, so you can see the direct impact of your Zakat.
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ISL AMIC RELIEF CANADA | ZAK AT CALCUL ATOR
Did You Know? We Follow a Zakat Policy Your Zakat is an Amanah, and we take that trust very seriously. At Islamic Relief Canada, we follow a scholar-verified Zakat Policy to ensure your Zakat reaches as many poor and needy people as possible to transform their lives. This ensures that Islamic principles are adhered to every step of the way, from project design and community fundraising discussions to project implementation.
Your Zakat is in trusted hands. LEARN MORE
islamicrelief.ca/zakat
SEC TION 1
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.
SA NE
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ISL AMIC RELIEF CANADA | ZAK AT CALCUL ATOR
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. At Islamic Relief, we distribute Zakat to the following categories in accordance with our Zakat policy:
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THE POOR & THE NEEDY
ZAKAT ADMINISTRATORS
THOSE IN MODERN-DAY SLAVERY
THE DEBT-RIDDEN
IN THE WAY OF ALLAH
THE DESTITUTE TRAVELLER
ISL AMIC RELIEF CANADA | ZAK AT CALCUL ATOR
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.
SECTION 1 | UNDERSTANDING ZAK AT
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SEC TION 2
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
1
STEP
2
STEP
3
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Calculating your Zakatable assets • Gold & Silver
• Stocks & Share Values
• Cash
• Investment Property &
• Money owed to you
Fixed Assets
• RRSP or RESP Savings
• Business assets
Calculating your liabilities to deduct • Personal expenses • Money you owe • Business expenses
Calculating your Zakat payment
ISL AMIC RELIEF CANADA | ZAK AT CALCUL ATOR
Step 1
Your Zakatable Assets
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 their 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 in scholarly opinion regarding jewelry. There is a difference of scholarly opinion regarding whether Zakat is due on jewelry kept for personal use vs. that which is kept as an investment or to sell. However, it is safer to pay Zakat on all gold or silver jewelry. For personal use items made from a mixture of metals, these are only subject to Zakat if 50% 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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Money Cash All cash you own is subject to Zakat, whether at home, in your bank accounts, in another currency or stored with another person. Cash can be easily understood as liquid wealth. It can be in the form of real cash bills, money available in the bank, or cryptocurrency. Note on interest earned on liquid wealth: do not include this amount here. It should be donated as regular Sadaqa or charity. My total cash amount is
$
Money 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 money owed to me is
$
RRSP or RESP Savings Since retirement plans and funds are owned assets or cash, they are subject to Zakat depending on the nature of the fund. Accessible: 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. Long Term: 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
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ISL AMIC RELIEF CANADA | ZAK AT CALCUL ATOR
$
Stocks & Share Values Long Term: 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. Short Term: 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
$
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
$
SECTION 2 | HOW TO CALCUL ATE YOUR ZAK AT
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Business Assets Cash According to the percentage that you own of the business, add the total cash the business has to your Zakatable assets. For business assets that were sold, the income generated from the sale is added to your Zakatable assets. Total cash amount is
$
Value of Inventory/Finished Goods According to the percentage that you own of the business, add the following to your Zakatable assets: • •
Total value of inventory (wholesale price of all assets that were purchased for resale) Total value of finished goods
Total value of inventory and finished goods is
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ISL AMIC RELIEF CANADA | ZAK AT CALCUL ATOR
$
Value of Work in Progress/Materials According to the percentage that you own of the business, add the total value of work in progress and cost of raw materials to your Zakatable assets. Total value of work in progress and raw materials is
$
Value of Accounts Receivables According to the percentage that you own of the business, add the total value of accounts receivables that will be collected, to your Zakatable assets. Total value of accounts receivables that will be collected
My Total Zakatable Assets are
$
$
SECTION 2 | HOW TO CALCUL ATE YOUR ZAK AT
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Step 2
Your Liabilities
Immediate Liabilities Personal Expenses You may deduct your personal and living 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
$
Money You Owe You may deduct any short-term debts that you owe and intend to pay immediately from your Zakatable assets. For long-term debt that you are actively paying, such as mortgages or student loans, the preferred scholarly opinion is that you should only deduct the immediate month’s principal (non-interest) portion.* Short-term is considered anything less than one lunar year, and long-term is considered more than one lunar year. If payments are not being paid on the long-term debt, then it should not be deducted from your Zakatable assets. * There is a difference of opinion that allows the non-interest or principal portion of the upcoming lunar year’s worth of payments to be deducted for Zakat calculation purposes. Please refer to your local scholars.
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, and salaries, even if they are outstanding or overdue. You may also deduct the amount of outstanding short term commercial loans that are due in less than 1 lunar year and you actively intend to pay back. For long term business debt, deduct only the immediate month’s principal (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
$
SECTION 2 | HOW TO CALCUL ATE YOUR ZAK AT
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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 =
$
You only owe Zakat if your net Zakatable wealth is more than Nisab. Your total Zakat due is 2.5% of your Net Assets.
My Zakatable payment is
$ Zakatable Wealth
x
0.025 =
$ ZAKAT PAYMENT 16
ISL AMIC RELIEF CANADA | ZAK AT CALCUL ATOR
SEC TION 3
SERVICES TO HELP YOU 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.
CALL US 1-855-377-4673 Monday - Friday 9am - 5pm EST Speak to our team if you have questions when calculating your Zakat 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!
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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.
SECTION 3 | SERVICES TO HELP YOU
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FOLLOW YOUR DONATION OUR DIS T RIBU T ION PROCE S S
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Rights-holder 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 rights-holder. 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 rights-holders, 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 rights-holders who are eligible to receive Zakat.
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 rights-holders 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.
SECTION 3 | SERVICES TO HELP YOU
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SEC TION 4
QUICK FACTS & FAQ Is Islamic Relief Canada a registered charity? Yes, we are a registered charity with the CRA. Our charity number is 821896875RR0001.
How does Islamic Relief Canada use Zakat funds? Abiding by our scholar verified Zakat policy, Islamic Relief uses Zakat funds for Zakat eligible purposes as defined in the eight categories of Zakat. Islamic Relief identifies those well below Nisab and mainly allocates Zakat funds to category 1, Fuqara & Masakin (the poor and needy). Zakat funds reach the poor and needy through cash transfers, food, shelter, education, and livelihood support, providing rights-holders the means of ownership and a chance to uplift themselves from poverty.
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Which countries do you help in? We are an international organization with the ability to help those most in need all over the world. We work in over 40 countries worldwide and also fund a number of organizations here in Canada to amplify their Zakat efforts.
Do you assist Muslims only? Islamic Relief Canada focuses its Zakat implementation in areas where there is a clear Muslim majority among the population. However, as a humanitarian organization, we do this in a way that does not discriminate between people on the grounds of race, religion, sect, gender, or ability and is bound by the internationally recognized humanitarian principles of impartiality, neutrality, independence, and humanity. To ensure non-Muslims in such situations receive the same level of assistance, additional funding will firstly be sought from other sources of funds. If other funds are not available, then Zakat may be used.
ISL AMIC RELIEF CANADA | ZAK AT CALCUL ATOR
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.
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3501 Mainway Burlington, ON L7M 1A9 www.islamicrelief.ca 1-855-377-4673 (HOPE) Registered Charity No. 821896875RR0001