Zakat and Tax Planning

Dr Nur Shuhada Kamarudin, AIFP

 Learning outcome

• Understand individual tax and zakat

• Understand types of zakat
 Zakat

• One of the five pillars in Islam (3rd pillar of Islam)

• Zakat literally means “growth”, “increase” or ‘multiply’: by
paying zakat, the payer will increase the religious merit and
blessings from Allah.
• Other meaning of zakat is ‘purify”. Refers to the purification
of a Muslim’s wealth and soul.
 Surah At-Taubah (ayat 103)

Take, [O, Muhammad], from their wealth a charity by which you purify them and cause
them increase, and invoke [ Allah 's blessings] upon them. Indeed, your invocations are
reassurance for them. And Allah is Hearing and Knowing.
Surah An-Nur (ayat 56)

And establish prayer and give zakah and obey the Messenger -
that you may receive mercy.
 Zakat cont…

• Zakat is paid on the net balance after a Muslim has spent on basic
necessities, family expenses, due credits, donations and taxes.
• Every Muslim male or female who at the end of the Hijrah year is
in possession of equivalent of 85 grams of gold or more in cash or
articles of trade, must pay his or her zakat at the minimum rate of
2.5%.
• In Malaysia, zakat is the responsibility of the Islamic Religious
Council of each state in the country.
 • Islam
• Free (slave are not required to
pay zakat except zakat fitrah)
• Complete ownership ( Milk al-
Tamm)
Condition to • Intention to conduct business-
fulfilled for zakat on business
zakat to be • Completion cycle (Hawl)
• Hawl is one Islamic or Hijri
compulsory. year (1 year Hijri= 354.5 days,
1 year solar = 365.25 days)
• Above valuation (Nisab)
• 85gram of gold= 2.5%
• Growth (al-Nama’)
 • Zakat fitrah
• Zakat al-Mal (on wealth)
• Zakat income
• National Fatwa committee conference (special)
which was held on 22nd June 1997. agreed that
zakat on salary is compulsory for those who
qualify (met the hawl and nisab).
• Employment income which is subjected to zakat
refers to:
Type of zakat • Annual salary
• Deferred salary
• Various allowances (relayed to employment)
• Others (e.g bonus, or any other income
which could be considered as income
related to employment)
• Income from professional services
• Income from undertaking task or rendering
professional services (e.g. consultants)
 • Zakat on Business
• Zakat on Savings
• Single saving account
• Multiple savings account
• Takaful cash value
(https://www.zakatselangor.com.my/info
-zakat/zakat-kewajipan-berzakat/zakat-
takaful/)
cont • Zakat on gold and silver
• Gold for non-usage
• Gold for usage
• Silver (200 dirham equivalent to 595
grams)-2.5%
• Zakat on shares/investments
• Zakat on livestock
• Zakat on Crops (e.g. 363 gantang or 1300kg
like paddy, wheat, cereals, and etc)
 Zakat recipients

• Surah al-Tawbah:60 . It is clear that there are eight groups of rightful

recipients of zakat.
• Poor and needy (al-fuqara’ and al-Masakin)
• The Administrators of zakat (Amil)
• Those whose hearts are made to incline to Islam (Mu’allaf)
• The ransoming of slaves (Riqab)
• Those who are in debt (asnaf Gharimin)
• For the cause of Allah ( fi Sabilillah)
• Those who are stranded during a journey (Ibn Sabil)
 Discussion
How about zakat on our
money in KWSP?
Calculation of Zakat
• From Zakat Selangor

Hasil al-Mustaghallat: Hasil Sewaan Rumah,

Sewaan Aset, Sewaan Kenderaan, Hasil
Pertanian (Getah, Kelapa Sawit),Hasil Yang
Dikeluarkan Binatang Spt Susu, Telur, Madu Dsb
cont
 References
• Lahsasna, A.
(2016). Fundamentals of
shariah financial planning.
IBFIM.
• Kapoor, J. R., Dlabay, L. R., &
Hughes, R. J. (2017). Personal
finance. Boston, MA: McGraw-
Hill Irwin.