Most Muslims calculate zakāt on cash savings and stop there. For families with significant gold, equity holdings, business interests, or receivables, this often understates the obligation by a meaningful multiple. The methodology below is the standard AAOIFI-aligned framework — universal across markets.
What is zakatable
| Asset class | Zakatable? | Notes |
|---|---|---|
| Cash, savings, term deposits (where permissible) | Yes | At face value |
| Gold and silver above nisāb | Yes | At market value |
| Trading goods, business inventory | Yes | At wholesale market value |
| Receivables and outstanding debts owed to you | Yes (with detail) | Only "expected to be repaid" debts |
| Equity investments (shares, funds) | Yes (with methodology) | Two methodologies — see below |
| Sukūk holdings | Yes | At market value |
| Cryptocurrency | Yes | At market value (mainstream contemporary opinion) |
| Personal residence | No | Only if held for resale |
| Personal vehicle | No | Only if held for resale |
| Household goods, clothes | No | — |
| Pension fund (Super) | Complicated | See below |
The nisāb
The threshold below which zakāt is not owed:
- 85 grams of gold (in current market value), or
- 595 grams of silver (in current market value)
The believer's choice between these matters: silver-nisāb is dramatically lower in today's market, which means more believers cross threshold under silver — and pay zakāt earlier in their wealth journey. Many contemporary scholars (including Mufti Taqī) recommend silver-nisāb on the basis that it expands the obligation in the believer's favor — more wealth distributed, more believers participating.
The two methodologies for equities
There are two scholarly methodologies for zakatable value on equity holdings:
Method A — Net asset (preferred by AAOIFI / Mufti Taqī)
Zakāt is owed on the zakatable assets of the underlying company, in proportion to your shareholding. This requires looking through to the company's balance sheet:
Zakatable amount per share = (cash + receivables + inventory) ÷ total shares
Your zakāt = Zakatable amount per share × shares held × 2.5%
This is mathematically the more accurate method but operationally difficult for retail investors holding diversified portfolios.
Method B — Market value (simpler, more permissive)
Zakāt is owed on the full market value of your holdings, treated as trading goods.
Your zakāt = Market value of all holdings × 2.5%
Some scholars distinguish: if held for trading (active turnover), full market value applies; if held long-term as investment, the look-through method is more accurate.
The conservative position — and what this notebook recommends for personal use unless you have time and willingness to do the look-through — is Method B for simplicity, supplemented by purification calculations where the underlying business has small unavoidable interest income.
The retirement-fund question
Locked retirement savings — Australian superannuation, US 401(k)/IRA, UK pensions/SIPP, Canadian RRSP — create a genuine fiqh question because the funds are not accessible until a preservation/retirement age. Three views:
- Liability-only view. Super is a future entitlement, not present property. No zakāt until accessible.
- Asset view. Super is wealth you own; the access restriction is a regulatory limit, not a fiqh-relevant one. Zakāt owed annually on the current balance.
- Compromise view. Zakāt owed annually on the vested portion (employee contributions and matched-employer); not on growth or unrealized gains until accessed.
Different scholars hold different views. The conservative position — and the one that produces more zakāt distributed, never less — is to pay annually on current balance.
Annual calculation framework
The standard practice: pick a fixed date (often the 1st of Ramaḍān, the believer's birthday, or end of the Islamic year), calculate zakāt on everything held at that date that meets the nisāb threshold.
A sample worksheet (amounts in AUD purely as an illustrative currency — use your own; the method is identical):
| Item | Value | Zakatable? | Zakatable amount |
|---|---|---|---|
| Cash in transaction account | 5,000 | Yes | 5,000 |
| Cash in non-interest savings | 25,000 | Yes | 25,000 |
| Physical gold (allocated vault holding) | 60,000 | Yes | 60,000 |
| Sharia-compliant equity portfolio | 120,000 | Yes (Method B) | 120,000 |
| Sharia-compliant pension / superannuation | 180,000 | Yes (conservative view) | 180,000 |
| Business equity stake | 50,000 | Yes (zakatable portion of business assets) | 35,000 |
| Receivable from family loan (expected) | 8,000 | Yes | 8,000 |
| Total zakatable | 433,000 | ||
| Zakāt (× 2.5%) | 10,825 |
Distribution
The eight categories named in the Qurʾān (al-Tawbah 9:60):
- The poor (fuqarāʾ)
- The needy (masākīn)
- Zakāt administrators (ʿāmilīn ʿalayhā)
- Those whose hearts are to be reconciled (muʾallafah qulūbuhum)
- To free those in bondage (fī al-riqāb)
- Those in debt (ghārimīn)
- In the path of God (fī sabīl Allāh)
- The wayfarer (ibn al-sabīl)
In Australian practice, this typically means distribution through established Muslim charities (NZF Australia, Muslim Aid Australia, MAA International, Islamic Relief Australia). Some scholars permit and encourage direct distribution to known poor in one's own community; others prefer institutional distribution for verification.