Zakah / Zakat and Purification Calculations
For some investors, zakah (zakat) and purification are an essential part of the investment process.
Zakah (pl zakat) is the financial obligation every Muslim must pay on surplus wealth above a certain amount (nisab) they’ve owned for at least a year.
Azzad calculates zakah every year on investment and retirement accounts owned by its clients for 12 lunar months. Calculations are usually performed a week before the month of Ramadan.
Zakah and Purification Calculations
Azzad’s zakah accounting software calculates zakah by considering the following:
1. Whether the investments in the accounts are for trade or income deriving.
2. Whether the accounts are tax-deferred, taxable, or non-taxable.
3. The amount of taxes and penalties, if any, would become due if the accounts were liquidated and distributed to investors.
Azzad provides the calculation figures so clients can disburse the correct minimum zakah amount to their favorite charities or recipients.
Zakah is not required to be paid from the account on which it was assessed; clients can make donations from any checking, saving, or investment account they choose.
Clients bear all liabilities for any taxes and/or penalties they may incur when withdrawing money from their accounts. Azzad does not provide tax advice, so clients should consult with their tax advisor regarding any tax consequences resulting from liquidation or distribution.
