Answered by Mufti Yusuf Mullan
I have a question in regard to Zakaat. I am sure you will agree that many Muslims do not know how to pay Zakaat as much as we know how to perform our daily prayers. Even though there are many books on the subject, most of them ignore the new financial, economic reality in regard we currently live in.
wa alaikum salaam,
Firstly “nisab” does not mean cost of living for you and your family. “nisab” is a term for the minimum zakaat payable amount (612.36g silver or its monetary equivalent in cash, gold, or merchandise bought with the intention to sell), possessing less than which classifies one to be legally poor. This is what is meant by the term “nisab” in the context of zakat.
Secondly, the calculation mentioned in the question does not take into account gold and silver, both of which are the root of zakat payable assets by scholarly consensus. Along with cash, gold and silver, merchandise bought with the intention to sell is also zakat payable.
The third aspect which is of utmost importance and is not clear in the question is the subtraction of debts when calculating the zakat at the end of every lunar year.
You should have a set date every year in which you calculate your zakat. When that date arrives, you should add up all your zakat-payable assets (the four mentioned above), and then subtract from it all of your debts. Whatever remains, pay zakat on behalf of it at the rate of 2.5%. There is no need to tie this with your income, be it gross or net. Zakat is payable on what remains saved on that particular date (and not on what is spent). This is irrespective of what occurs during the course of the year in terms of diminishment or gain of wealth. Thus, the income figure is not relevant.
The date comes into effect exactly one lunar year from the day in which you first became possessor of the minimum zakat-payable amount ‘nisab’ (612.36g silver or its monetary equivalent in cash, gold, or merchandise bought with the intention to sell).
On my paycheque, from the gross, the following is deducted: >Tax >Canada pension plan >Employment Insurance >Employee pension >Health benefits
From the above five only the two pensions are being saved , and will be returned to you at a future date. Zakat is payable on these. However, due to their not being in your immediate possession, you have the option of delaying payment of zakat (2.5%) on behalf of them until they come into your possession many years later. At that time, you will need to pay for all the previous years. Calculating this may become complicated. Thus, the scholars advise paying zakat on behalf of pension funds yearly while they are being deducted.
>From my net pay, I also invest in RESP, Registered Education Savings Plan.
This amount is also being saved and will be returned at a future date. Therefore its ruling is identical to what was just mentioned i.e. the option of delaying payment for all previous years until retrieval of the amount, or preferably paying the 2.5% year by year while it is being invested.
And Allah knows best.