Zakat is an Arabic word with multiple meanings including to purify, to profit and to increase. In Islam, it is a form of charity to help those in need. Like the five obligatory prayers, Zakat is a pillar of Islam and is compulsory upon every able Muslim who meets the necessary criteria of wealth. It must be paid annually.
Below we answer some commonly asked questions when it comes to Zakat. However, due to the complex nature of Zakat, it is best to consult your local mosque or Sheikh for specific rulings or questions about donating your Zakat.
What is Nisab?
Nisab is the minimum amount of wealth – after calculating personal expenses – that a Muslim should have before they become eligible to pay Zakat. This is often referred to as the Nisab threshold. The Nisab threshold is calculated according to the value of gold or silver and is usually determined by religious organisations or institutes. The Nisab is the value of 85 grams of gold or 609 grams of silver.
Nisab value according to the Australian National Imams Council (as of 01/04/2021):
Using value of silver (609 grams) – approximately $5411.10 AUD
Using value of gold (85 grams) – approximately $627.27 AUD
Who should pay Zakat?
As one of the five pillars of Islam, Zakat should be paid by every adult Muslim who owns wealth equivalent to or above the Nisab threshold. This includes valuables such as jewellery and ornaments as well as cash, investments and real estate.
How much Zakat should I pay?
Your zakat amount should equate to 2.5% of your total wealth.
When should Zakat be paid?
Once a person reaches the minimum threshold (Nisab) and possesses wealth for a complete lunar year (hawl), Zakat is payable immediately. While many Muslims prefer to pay their Zakat during Ramadan due to increased rewards and blessings, Zakat can be paid at any time of the year as long as the person has been in possession of excess wealth for one lunar year.
What is the difference between Zakat al-Mal and Zakat al-Fitr?
Zakat al-Fitr is a compulsory donation that all Muslims are required to pay at the end of Ramadan and before the Eid prayers. Eligibility is the main difference between Zakat al-Mal and Zakat al-Fitr. Unlike Zakat al-Mal, all Muslims – regardless of their age – are required to pay Zakat al-Fitr as long as they have food in excess to what they reasonably need. Zakat al-Fitr should be paid for each member of the household, including children, the elderly and any other dependants. Usually, this means that the head of the household will make a payment on behalf of the whole family.
The minimum amount due is the equivalent of about one sa’ (approximately 3kg) of rice, wheat, or other staple food for each member of the household – including children and dependants – even if they do not live in the same house. While Zakat al-Mal equates to 2.5% of an individual’s total wealth, Zakat al-Fitr donations tend to be significantly smaller – at around $12 or less per household member.