Your Zakat in Trusted Hands

Founded in 1993, Muslim Welfare Canada is a charitable organization dedicated to combating poverty and providing essential services to those in need in Canada and abroad. MWC operates various programs in Canada, including food banks and shelters, and supports orphans overseas.

Zakat Integrity: Verified Policy Details

Be assured your Zakat meets Islamic principles. Verified by Mufti Imam Yusuf Badat, our policy ensures careful distribution of your Zakat. For insight into our transparent process and the positive change your donation brings, please take a moment to review our detailed Zakat Policy Verification Document.

Ensure your Zakat is utilized with the highest fidelity to Islamic principles. Our comprehensive Zakat policy, verified by esteemed Mufti Imam Yusuf Badat, outlines the meticulous process we follow to distribute your contributions. It's important to us that you feel confident and knowledgeable about how your Zakat is making an impact. We invite you to review our Zakat Policy Verification Document to understand the care and expertise that stewards your giving.

What is the Meaning of Zakat?

Zakat, a pillar of the Islamic faith, signifies purification and growth, derived from Arabic roots meaning 'to be clear' and 'to increase.' More than just a financial duty, it embodies spiritual cleansing and social responsibility. Zakat purifies the giver's wealth as an obligatory charity, promoting a balance between material and spiritual life. It fosters community cohesion by aiding the needy and ensuring equitable wealth distribution. Thus, Zakat is a vital tool for personal growth, societal welfare, and moral responsibility.

Give Zakat for growth and purity. It cleanses wealth and helps others, balancing life's material and spiritual sides. It's key for personal and social good.

MWC’s Zakat Advisor

Imam Yusuf Badat, renowned scholar, is now MWC's Zakat Advisor, ensuring your zakat is used rightly and with full Islamic adherence.

Imam Yusuf Badat, esteemed Islamic scholar, is now MWC's Zakat Advisor. He brings deep knowledge of Islamic law to manage zakat funds properly. Under his guidance, your zakat will be distributed faithfully, ensuring meaningful aid to those in need.

Mufti Yusuf Badat

Zakat Policy Advisor

MWC’s Zakat Advisor

Mufti Yusuf Badat, a renowned Islamic scholar and community leader, has joined the Muslim Welfare Canada (MWC) as the Zakat Policy Advisor. With his extensive knowledge in Islamic jurisprudence and years of experience in guiding community welfare initiatives, Imam Badat is perfectly positioned to oversee MWC’s zakat distribution. His appointment ensures that your zakat contributions are managed and allocated in strict accordance with Islamic principles, providing transparency and trust. MWC’s commitment to supporting those in need, coupled with Imam Badat’s expertise, makes it an ideal choice for your zakat donations, ensuring they make a meaningful impact in the lives of the less fortunate.

What is the Meaning of Zakat?

Zakat, a pillar of the Islamic faith, signifies purification and growth, derived from Arabic roots meaning ‘to be clear’ and ‘to increase.’ More than just a financial duty, it embodies spiritual cleansing and social responsibility. Zakat purifies the giver’s wealth as an obligatory charity, promoting a balance between material and spiritual life. It fosters community cohesion by aiding the needy and ensuring equitable wealth distribution. Thus, Zakat is a vital tool for personal growth, societal welfare, and moral responsibility.

Mufti Yusuf Badat

Zakat Policy Advisor

Zakat Calculator

Your Zakat has the power to transform lives and empower communities in Canada and abroad. To make the process easier for you, use our online Zakat calculator to enter your assets and liabilities, and easily find your Zakat contribution below.

Live, up-to-date Nisab values are provided for your convenience.

Assets

Cash at Home/Bank

Cash and liquid investments are subject to Zakat.

You should include cash in all your bank accounts, in your wallet and under your mattress!

If interest has been earned on your liquid investments, then all of it should be given to charity and only the principal invested amount should be noted for Zakat

Gold
Gold and silver, in whichever form (jewellery, coin, ingots etc.) are subject to Zakat.

However, there is a difference of opinion about Jewelry that is worn and if its Zakatable or not.

If you own personal use items made from a mixture of metals, these are only liable 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 Zakatable.

Gold and silver can be valued at its resale value by a jeweler or you can multiply the amount of grams (of gold or silver) you own by the current market value.

Manzil takes the opinion that Zakat should be paid on Gold and Silver regardless of whether it is used or not.
Silver
Gold and silver, in whichever form (jewellery, coin, ingots etc.) are subject to Zakat.

However, there is a difference of opinion about Jewelry that is worn and if its Zakatable or not.

If you own personal use items made from a mixture of metals, these are only liable 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 Zakatable.

Gold and silver can be valued at its resale value by a jeweler or you can multiply the amount of grams (of gold or silver) you own by the current market value.

Manzil takes the opinion that Zakat should be paid on Gold and Silver regardless of whether it is used or not.
Business Inventory
In relation to your business, you should include the following as Zakatable assets below where relevant.

  1. Cash
  2. Goods for Sale* (Wholesale Price or Retail Price)
  3. Inventory* (Wholesale Price or Retail Price)
  4. Work in progress (at cost)
  5. Raw materials (at cost)
*We follow the opinion that Zakat is due upon the wholesale price of your inventory or goods for sale.

What do we mean by Wholesale price? If someone wanted to buy this inventory or your goods in bulk what price would you sell it to them for. This would be liable portion of your Zakat and if you pay lower than this that you are underpaying your Zakat.

If however you decide to pay on the Retail price then you are going above the requirement of whats liable and doing ihsaan as many scholars have stated as your Zakat will benefit more people as you are paying more.

If you have business liabilities to offset against these assets, then you will be able to enter these in the next section.

Important: If you find that your business liabilities payable between now and your Zakat due date exceed your business assets, then please omit all business details from your Zakat calculation since this will affect the Zakat that you may owe in a personal capacity.

Please only include business assets in line with your % ownership of the business.
Share Assets
Scenario 1: Day trading/short-term trading (Less than one lunar year)

Include entire value of your portfolio and pay Zakat on it.

Scenario 2: Long term investments (one lunar year or more)

From the balance sheet of the company (in which you hold shares), use the following formula:

  1. Amount Y = (Cash + Cash Equivalent + Accounts Receivables + Inventory) / Total Number of Shares Issued by Company
  2. Your Zakatable Amount = [(Amount Y) x (Number of shares you own)]
Please note: if you are receiving dividends, please add them to your Zakatable assets.

Scenario 3: Cashing out

Upon cashing out, the amount remaining after taxes and fees is added to your Zakatable assets.
RRSP Assets
First assess which scenario your asset falls under. Scenario 2 is very specific to some pension funds otherwise most fall under Scenario 1.

Scenario 1: Have access to fund withdrawal. Total RRSP/RESP value (your contribution + other contributions) minus the Penalties and Taxes you will pay for early withdrawal and pay Zakat on that.

Scenario 2: No access to withdraw funds. If long term and no control/ access over assets then you treat it as passive investment and only pay zakat when you have access to your investment.

Please Note: upon maturity of the fund, you have to pay Zakat on the entire value of the fund regardless if you withdraw in increments or the entire amount. You can deduct any fees or taxes if applicable upon withdrawal if necessary.
RESP Assets
First assess which scenario your asset falls under. Scenario 2 is very specific to some pension funds otherwise most fall under Scenario 1.

Scenario 1: Have access to fund withdrawal. Total RRSP/RESP value (your contribution + other contributions) minus the Penalties and Taxes you will pay for early withdrawal and pay Zakat on that.

Scenario 2: No access to withdraw funds. If long term and no control/ access over assets then you treat it as passive investment and only pay zakat when you have access to your investment.

Please Note: upon maturity of the fund, you have to pay Zakat on the entire value of the fund regardless if you withdraw in increments or the entire amount. You can deduct any fees or taxes if applicable upon withdrawal if necessary.
Property
The house in which you live is not subject to Zakat.

If a property or other fixed asset is purchased with the express intent to resell, then the entire sale value of the property is subject to Zakat.

Remember this rule does not apply to the house you live in yourself. This is for additional properties you may own or possess.

If you don’t have enough cashflow to pay the Zakat due if marked for sale then you should pay Zakat on the property once you have the funds available and Allah knows best.

If it is a rental property then you only have to pay Zakat on the rental income minus the expenses related to the rental income. Remember, you will only pay Zakat on what you currently possess in cash or liquid assets. Whatever has already been spent has no Zakat on it.

If you have no intention with a property or fixed asset then there is no Zakat on it until it falls into one of the other options mentioned above.
Cash Investments
Cash investments such as bonds or savings products offered by your bank, which offer an interest-based return are prohibited in Islam. Although there is no Zakat due on forbidden wealth, Zakat is still due on the proportion of the investment that is Halal.

For example, if Ali invested $10,000 in a savings product that has been yielding 7% return based on interest, then Zakat is due only on the original investment (or the principal value), subtracting any interest received.

If you own an interest-bearing asset, then you are advised to sell the asset, give away the interest money received in charity and use the remaining money in a Halal manner.
Debts Owed To You
Zakat is payable on strong debts, i.e. money owed to you that you are confident will be returned back to you.

This may include personal loans to friends and family.

This does not include outstanding wages, dowry, inheritance or assets held in trust.
Other Assets
If you possess any other cash equivalent or liquid assets that are not mentioned above, please add the dollar value of these here. This could include (but not limited to)

  1. the face value of your cryptocurrency holdings
  2. other currencies held in offshore accounts which you did not include above
  3. assets belonging to a family member on whose behalf you are paying Zakat

Liabilities

Personal
Certain liabilities can be deducted from your Zakatable assets.

These include outstanding or overdue living expenses such as rent payments, utility bills and debts.

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.

If payments are not being paid on the long-term debt, then it should not be deducted from your zakatable assets.
Business
Please include the value of any of the following outstanding/unpaid liabilities that are either due between now and your Zakat due date or overdue payments:

  1. Commercial loans that have been used to finance Zakatable assets
  2. Rent
  3. Utility bills
  4. Salary
  5. Other bills
Do not include any liabilities that are due to be paid beyond your Zakat date.

Important: If you find that your business liabilities payable between now and your Zakat due date exceed your business assets, then please omit all business details from your Zakat calculation since this will affect the Zakat that you may owe in a personal capacity.

Please only include business liabilities in line with your % ownership of the business.

Nisab

Calculations Based on Gold Nisab of 88 Grams

  • Silver (613g)

    Price/g: $1.13

    Nisab: $674.43

  • Gold (88g)

    Price/g: $77.57

    Nisab: $6593.38

Zakat Summary

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Frequently Asked Questions

When you support Muslim Welfare Canada, you are helping our nationwide network of food banks deliver programs at the front line of hunger. Community based meal programs, food banks and distributions for elders.

What is Zakat?

Zakat is a fundamental pillar of Islam, serving as a mandatory act of charity ordained by Allah. It is incumbent upon every adult and able-bodied Muslim to fulfill this obligation. Zakat is not merely a charitable contribution but a duty to assist those in need within the Muslim community. It is applied to specific assets, identified by Islamic Law (Shariah), which have the potential for growth. These assets include, but are not limited to, cash, gold, silver, business merchandise, and agricultural produce. The rate of Zakat is set at 2.5% annually and is calculated based on the lunar Islamic calendar. The amount of Zakat paid is determined by the current market value of the zakatable assets, after deducting any liabilities. This practice of giving Zakat is not just a means of financial assistance for the less fortunate but also a way to purify one’s wealth and soul, fostering a sense of community and responsibility among Muslims.

Zakat al Fitr, also known as Fitrana, is a distinct charity from Zakat. While Zakat is an obligatory annual payment of a percentage of one’s wealth to the poor, Zakat al Fitr is a separate charitable obligation associated with Ramadan. It must be paid by the head of the household so long as their wealth reaches the Zakah Nisab on the day of eid, for every family member, including children and the elderly, before the Eid prayer. The purpose of Zakat al Fitr is to enable the less fortunate to celebrate Eid and purify the fasting person from any shortcomings during Ramadan.

Nisab is the minimum threshold of wealth a Muslim must possess for a lunar year to be obligated to pay Zakat. It serves as a demarcation point, distinguishing those who are obliged to give Zakat from those who are not. The concept of Nisab is rooted in Islamic jurisprudence and aims to ensure that Zakat obligations only apply to those with sufficient financial means. The value of Nisab is calculated based on the market value of either 87.49 grams of gold or 613.35 grams of silver. The use of these precious metals as a benchmark reflects their historical role as standard measures of wealth in Islamic society. The choice between gold and silver values depends on which is lower, to benefit the poor. If a Muslim’s wealth exceeds this threshold for one lunar year, they are required to pay 2.5% of their wealth exceeding Nisab as Zakat, thereby contributing to the welfare of the less fortunate in the community.

To calculate your Zakat, first, determine if your wealth exceeds the Nisab threshold, the minimum amount making Zakat obligatory. Nisab is equivalent to the value of 87.49 grams of gold or 613.35 grams of silver. Calculate the total value of your zakatable assets, including cash, savings, gold, silver, business merchandise, and shares. Subtract any immediate debts or liabilities from this total. If the remaining amount is above Nisab and held for a lunar year, pay 2.5% of this as Zakat. Use a Zakat calculator for accuracy, considering the fluctuating values of gold and silver.

In Islam, zakat is required on wealth or assets that are productive in nature, meaning they have the potential to generate profit or benefit. This includes a variety of asset types that can increase in value or yield income. Typically, these assets are not meant for immediate consumption but are held with the intention of growth or earning. These include business merchandise, gold, silver, cash, stocks, mutual funds, stock options, TFSAs, livestock, buried precious metals or minerals, or agricultural produce.

The concept is rooted in the Islamic principle of supporting economic activity and helping those in need through the redistribution of wealth. By mandating zakat on productive assets, Islam encourages responsible wealth management and ensures a portion of it benefits the less fortunate. This system not only purifies the wealth of the giver but also fosters a sense of community and shared responsibility.