In Islam, Zakat al-Mal is a profound act of worship and a crucial financial obligation. It reflects the principles of social welfare and wealth distribution.
The Prophet Muhammad (peace be upon him) said, “Protect your wealth by paying Zakat, and heal your sick with charity, and prepare for the calamities of giving” (Al-Tirmidhi).
This article aims to explain the essentials of Zakat Money in Canada, including the percentage required, the Nisab threshold, and how to calculate your Zakat, specifically for Muslims residing in Canada.
Learn about the Zakat al-Mal percentage, the Nisab threshold, and how to calculate your Zakat on cash, saved money, and bank deposits in Canada.
Zakat Al-mal Percentage
The standard percentage for Zakat al-Mal is 2.5% of the total qualifying wealth that a Muslim possesses over a lunar year.
This percentage is universally applicable regardless of the form of wealth, whether it is cash, savings, or investments.
Zakat Ratio on Money
The Zakat ratio specifically on money is 2.5%.
This means if you have a certain amount of cash that meets the Nisab threshold and has been in your possession for a full lunar year, you are required to pay 2.5% of that amount as Zakat.
Nisab of Zakat Money in Canada
The Nisab is the minimum amount of wealth a Muslim must possess before they are liable to pay Zakat.
It is equivalent to the value of 85 grams of gold or 595 grams of silver. For instance, if the current value of gold is $60 per gram, the Nisab would be 85 grams x $60 = $5,100.
Zakat al-Mal Calculator for Zakat Money in Canada
To facilitate the calculation of Zakat, many Islamic organizations provide online Zakat calculators.
These tools help Muslims in Canada to accurately calculate the amount of Zakat they owe by considering the current value of gold and silver, and the total qualifying wealth.
How to Calculate Zakat Money in Canada?
Calculating Zakat on money involves the following steps:
- Determine the current Nisab value based on 85 grams of gold or 595 grams of silver.
- Calculate the total amount of your wealth, including cash, savings, and investments.
- Ensure that this amount has been in your possession for a full lunar year.
- Subtract any debts you owe from your total wealth.
- If the remaining amount exceeds the Nisab, calculate 2.5% of it as Zakat.
Zakat-eligible Money
Cash Money
Zakat is applicable on cash money that meets the Nisab threshold and has been in your possession for a lunar year.
This includes any cash you have at home, in your wallet, or stored elsewhere.
Saved Money
Saved money, such as funds kept in savings accounts or other forms of savings, is also subject to Zakat if it meets the Nisab threshold and the one-year holding period.
Money in Bank
Any money stored in bank accounts, including checking and savings accounts, is subject to Zakat.
You should calculate the total balance at the end of the lunar year and apply the 2.5% Zakat rate if it exceeds the Nisab.
Money Stored in a Bank in Canada
For Muslims in Canada, the process remains the same. Calculate the total amount of money stored in Canadian bank accounts, check if it meets the Nisab threshold, and then apply the 2.5% Zakat rate.
Ensure to consider the full lunar year when assessing the eligibility of the funds.
How Much Money to Pay Zakat in Canada?
To determine how much money to pay as Zakat in Canada, first calculate your total qualifying wealth (cash, saved money, and money in bank accounts).
If this amount exceeds the Nisab threshold and has been held for a lunar year, pay 2.5% of it as Zakat.
Minimum Amount of Money to Pay Zakat
The minimum amount of money required to pay Zakat is the Nisab threshold.
If your total qualifying wealth is below the Nisab, you are not required to pay Zakat.
On How Much Money Zakat is Applicable
Zakat is applicable on any amount of money that exceeds the Nisab threshold and has been in your possession for a full lunar year.
This includes cash, savings, investments, and bank deposits
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