HOW TO CALCULATE ZAKAT
HOW TO CALCULATE ZAKAT
The word Zakat (or Zakah) means: Blessing, purification, increase and goodness. It is so called as it blesses the wealth from which it is taken and protects it from misfortunes. It represents obligatory charity; all Muslims who are wealthy enough, must perform this charity in order to purify their wealth in the eyes of God. It is one of the five Pillars of Islam.
The simple summary for calculation of Zakat is to pay 2.5% of wealth value that you have owned for the previous 12 lunar months period.
Personal residence and car, as well as women’s personal jewelry are not included in the calculation(according to most scholars)
ELIGIBLE ASSETS
These are the categories or types of properties on which Zakat is calculated.
- Cash or cash equivalent such as bank accounts or saving bonds
- Gold, silver, mutual funds , tax free saving accounts (TFSA)
- Investment property (real estate, farms, manufacturing, trading companies)
WHEN tO pAY ZAKAT
Zakat is payable if total value of your possessions exceeds “Nisab”, which is equivalent to the price of 3 ounces(85gm) of gold.
- At the end of each fiscal lunar year or in advance as installments of the Eligible Assets
ZAKAT rATES
- Total value of Eligible Assets must be equal or higher than “nisab”
- Total value is defined as the quantity of wealth free of any encumbrances, that were in your possession for past 12 luner months
- Nisab equals Price of three 3 ounces of gold or 21 ounces of sterling silver
- Zakat payment equals a minimum of 2.5% or 1/40 of the Total Value of Eligible Assets
- Farm products such as crops, food products have a higher zakat of 5% or 10% depending on the source of water (irrigation or rain).
Please not that we intentionally have not included assets that are not in your position such as RRSP, RIF and loans. Scholars have different opinions on Zakat payment for these assets. It is recommended that you consult with the scholar of your choice and follow their advice .
Donate Zakat Today!
Zakat is the tool, in particular, that helps refine and polish the human soul through a delicate taming of the desire to have more. Zakat is a religious obligation for helping the poor, responding to the needy and supporting and protecting common interests upon which the well-being of the community and the nation depends.